TMI Blog2017 (3) TMI 1699X X X X Extracts X X X X X X X X Extracts X X X X ..... of salary, assessable u/s. 15 r/w s. 17(3), be brushed aside so (lightly), particularly in this context. The assessee shall have to bring material or evidence on record to substantiate/prove his claims, which can only be decided on the basis of the facts borne out thereby, i.e., on the basis of given/proven facts. CIT(A) shall then, where relevant, determine whether the assessee’s method of accounting, which is only for income from business and from other sources, regularly followed, is, as contended by him, ‘cash’, in which case the un-received sum of ₹ 500 lacs could be considered for its assessibility as income only on its receipt. Two, where not so, so that the assessee’s method of accounting, which has to be either cash or accrual, is indeed accrual, can the said amount be considered as accrued under the given facts and circumstances. The matter, accordingly, as afore-stated, is restored back to the file of the ld. CIT(A) – who was bound by the order by the tribunal in the first round, and whose directions shall continue to obtain, for a decision on merits, issuing definite finding of facts upon allowing the parties opportunity to represent their case before him. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal, following its decision in M.Ranjan Rao, another director in the same company, where it had held the amount, similarly received or due, as from the employer, so that it was liable to be assessed as profit in lieu of salary and could not be regarded as a non compete fee, set aside the impugned order vide its order dated 15.02.2012 (in ITA No.2114/Mds/2010/copy on record), and restored the matter back to the file of the first appellate authority for adjudication afresh in light of the facts noted by it in the case of Asst. CIT v. P.Rajendra Rao (in ITA No.589/Mds/2008), reproducing extensively there-from (at para 4/pgs. 3-7 of its order), in-as-much as the said order stood followed by it earlier in M.Ranjan Rao (supra), the facts of which case it notes to be identical to the instant case. The ld. CIT(A), in the second round, was of the view that the entire sum of ₹ 600 lacs received or receivable by the appellant is liable to be treated as a capital receipt and, further, that as the same is from CABL, it could not be treated as profit in lieu of salary. 3. We have heard the parties, and perused the material on record. There can in principle be no dispute, i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had been no accrual of the said balance in-as-much as CABL is a defunct company, having incurred huge losses during f.ys. 2003-04 and 2004-05, with a negative net worth of . 68.49 crores. That apart, the assessee claims to be following cash method of accounting. The matter with regard to the accrual or, in any case, inclusion of the said sum as income, therefore, remains to be decided. It may be appreciated that each year is a separate unit of assessment and, as is trite law, income can only be assessed for the right year. As such the question of deletion of the balance . 5 crores can only be decided after first adjudicating on the right year for which it can be said to have accrued or otherwise assessable. This issue, raised by the assessee throughout, though not accepted by the Revenue, cannot be presumed to be decided one way or the other, or get a burial, so as to be abandoned, only because non-compete fee stands held as not taxable up to AY 2002-03. The ld. CIT(A) shall therefore firstly determine the nature of the receipt, which cannot be presumed to be a non compete fee merely because the relevant agreement describes the payment as so or refers to it by that name, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and later co-opted as directors, itself indicates the same to be a part of a plan, a pre-mediated transaction, and integral to the takeover of the business of Citadel Fine Pharmaceutical Company Ltd. The same could be a part of the business restructuring as well, though the claim cannot be lightly made, nor can, like-wise, the Revenue s claim of the impugned sum being profit-in-lieu of salary, assessable u/s. 15 r/w s. 17(3), be brushed aside so (lightly), particularly in this context. The assessee shall have to bring material or evidence on record to substantiate/prove his claims, which can only be decided on the basis of the facts borne out thereby, i.e., on the basis of given/proven facts. The ld. CIT(A) shall then, where relevant, determine whether the assessee s method of accounting, which is only for income from business and from other sources, regularly followed, is, as contended by him, cash , in which case the un-received sum of ₹ 500 lacs could be considered for its assessibility as income only on its receipt. Two, where not so, so that the assessee s method of accounting, which has to be either cash or accrual, is indeed accrual, can the said amount be consid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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