DCIT 8(3), MUMBAI vs. VRUSHAL TRAIDNG P.LTD, MUMBAI

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ITA 5356/MUM/2013Status: DisposedITAT Mumbai18 November 2015AY 2009-103 pages

In favour of the Revenue: the Revenue's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal, following a Special Bench decision, held that non-compete fees are chargeable to tax as business income. Consequently, the order of the CIT(A) was set aside, and the Assessing Officer's order was restored.

What were the facts?

The Revenue appealed against the CIT(A)'s decision that a non-compete fee received by the assessee was not taxable as business income. The CIT(A) had followed a previous Tribunal decision in favor of the assessee.

What were the issues?

Whether a non-compete fee received by the assessee is assessable as business income under Section 28(va) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 28(va)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “ F” BENCH, MUMBAI

Hearing: 18.11.2015Pronounced: 18.11.2015

Per B R Baskaran, AM:

The appeal filed by the Revenue is directed against the order dated 25.3.2013 passed by the Ld CIT(A)-18, Mumbai and it relates to the assessment year 2009-10. 2. The revenue is aggrieved by the decision of Ld CIT(A) in holding that the non-compute fee of Rs.1.90 crores received by the assessee was not assessable as business income u/s 28(va) of the Act.

3.

None appeared on behalf of the assessee even though the notice of hearing was sent by registered post to the assessee. Hence, we proceed to dispose of the appeal ex-parte, without the presence of the assessee.

2

4.

We heard the ld. DR and perused the record. We notice that the ld. CIT(A) has decided the issue in favour of the assessee by following the decision rendered by the Tribunal in the case of M/s Hami Aspi Balsara V/s ACIT reported in 126 ITD 100. At the time of hearing, the ld.DR submitted that the Hyderabad Special Bench of the Tribunal has considered an identical issue in the case of ACIT V/s Dr. B V Raju (2012) 135 ITD 1 (SB), wherein it has been held that non-compete fee would be chargeable to tax as income from business in the hands of the persons associated with the transferor also. He further submitted that the decision rendered by the Special Bench was followed by the Mumbai Bench of the Tribunal in the case of Sterling Re-rolling Mills V/s ACIT (2012) 23 Taxmann.com 394(Mum). Accordingly he submitted that the decision rendered by the larger bench should be followed.

5.

We find merit in the submissions made by Ld D.R. In view of the above said decision of Special Bench, we set aside the order of ld. CIT(A) on this issue and restore the order of AO.

6.

In the result, the appeal of the revenue is allowed

Pronounced accordingly on 18th November, 2015. घोषणध खुरे न्मधमधरम भें ददनधंकः 18th Nov, 2015 को की गई । (PAWAN SINGH) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER भुंफई Mumbai: 18th Nov, 2015. व.नन.स./ SRL , Sr. PS

3 आदेश की प्रतिलऱपप अग्रेपिि/Copy of the Order forwarded to : अऩीरधथी / The Appellant 1. प्रत्मथी / The Respondent. 2. आमकय आमुक्त(अऩीर) / The CIT(A)- concerned 3. आमकय आमुक्त / CIT concerned 4. ववबधगीम प्रनतननधध, आमकय अऩीरीम अधधकयण, भुंफई /

5.

DR, ITAT, Mumbai concerned गधर्ा पधईर / Guard file. 6. आदेशधनुसधय/ BY ORDER,सहधमक ऩंजीकधय (Asstt.

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