TMI Blog2012 (10) TMI 1236X X X X Extracts X X X X X X X X Extracts X X X X ..... s profit in lieu of salary u/s.17(3) of the Act. 2.1 The Ld CIT(A) ought to have appreciated that the assessee was employed as director in the company M/s. Citadel Fine Pharmaceuticals Ltd.(CFPL) and by virtue of joint venture with Aurobindo Pharma, the company M/s. Citadel Aurobindo Biotech Ltd. was formed by convergence of CFPL Aurobindo Pharma Ltd. 2.2 The Ld CIT(A) ought to have appreciated the fact that the compensation paid to the director of the company who is an employee of the joint venture company is nothing but profit in lieu of salary u/s.17(3) of the Act. 2.3 It is submitted that the Ld CIT(A) ought to have appreciated that the assessee was not doing any separate independent business to compete in the field of ethical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the decision relied upon by the CIT(Appeals) is not applicable to the facts of the case as the receipt of non compete fee was revenue or capital is not the issue in the present appeal. In the order under consideration, the nomenclature of receipt itself is disputed as to whether it was a non compete fee; 2.9 It is submitted that the decision of the Hon'ble ITAT relied upon by the CIT(Appeals) in the case of Shri P Harihara Rao has not become final and appeal u/s.260A has been preferred by the department. 3. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the Ld. CIT(A) may be set aside and that of the Assessing Officer may be restored. 3. At the time of heari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer should be restored. 5. On the other hand, the A.R of the assessee filed before us a copy of the order of the Tribunal in the case of Shri P. Harihara Rao (supra) and submitted that on identical set of facts, wherein another directors of the company who had received non-compete fee of ₹ 6 crores from CABL on a similar agreement entered into with them, was taxed by the Assessing Officer as profit in lieu of salary u/s 17(3) of the Act and deleted by the CIT(A) following the decision of Hon'ble Supreme Court in the case of Guffic Chem Pvt. Ltd (supra) was upheld by the Tribunal and appeal of the Revenue was dismissed. The A.R of the assessee also filed before us a copy of the order of the Tribunal in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o made a statement at the Bar that besides the assessee, other six Directors of the company M/s CFPL had also received similar non-compete fee based on similar agreements entered into with M/s CABL. He submitted that in the case of three directors, the Assessing Officer himself had treated the receipt of non-compete fee as capital receipt and not taxed the same. 7. We have heard the rival submissions and perused the orders of the lower authorities and materials available on record. In the instant case, the assessee was a Director in the company, M/s CFPL. Another company in the name, M/s CABL acquired the Ethical Allopathic Pharmaceutical brands of several companies viz. M/s Citadel Fine Pharmaceuticals Ltd., M/s Citadel Fine Pharmaceuti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rao (supra) by observing as under: 4. I have carefully considered the submissions of the AR and also perused the reports of the AO and the Joint CIT. I find that facts of the case of the appellant is identical to that of Shri P. Harihara Rao wherein the non-compete fees was brought to tax u/s 17(3) as profit in lieu of salary by the AO which was deleted by the CIT(A) and the order of CIT(A) was confirmed by Hon'ble ITAT. Therefore, the decision of Hon'ble ITAT cited by the AR is directly applicable to the facts of the case of the appellant and hence respectfully following the decision of the Hon'ble ITAT I delete the addition made on this ground. 10. The CIT/DR contended before us that the Tribunal decided the issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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