TaxTMI 
TaxTMI 
2011 (12) TMI 387
X X X X Extracts X X X X
X X X X Extracts X X X X
....egistered office at Level 41, 101 Collins Street, Melbourne, Victoria 3000 (hereinafter referred to as 'Pacific Dunlop and Pacific Dunlop Holdings (Singapore) Pte, Ltd., a company incorporated under the laws of Singapore and having its registered office at 6, Loyang Wat 1, #02-02 Singapore 508704 (hereinafter referred to as 'PDSL'. The assessee company i.e. M/s. J.K. Chemicals Ltd. presently known as M/s. J.K. Invest Trade India Ltd (hereinafter to be referred as assessee-company) and Raymond Ltd., a company incorporated under the laws of India and having its registered office at Plot No. 156/H No.2, Village Zadgaibm Ratnagiri, Maharashtra 415 612 (hereinafter referred to as 'RAYMOND'). Under the said joint venture agreement, it was inter alia decided that in consideration of transfer of Condoms division by assessee-company, M/s. JKAL was to pay to assessee a sum of Rs. 5.51 crores and also assessee company to be paid an amount of Rs. One crore under the non-compete agreement which was entered into on 4.1.1997 with PDSL. A copy of Joint Venture Agreement dt. 17.12.1996 entered into containing relevant clauses are placed at pages 60 to 73 and at page 109 of Paper Book. A scheme of a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rn of Raymond filed for the year 1997-98. It was contended that AO has considered said amount of Rs. 1 crore as capital receipt in the assessment year under consideration merely because date of Court's order is after 31st March, 1997 but totally overlooked the fact that as per order of High Court, effective date of arrangement of transfer of Condom Division was 1st July, 1996. On behalf of assessee, action of AO was disputed stating the following reasons before Ld. CIT(A) which are mentioned at page 6 of CIT(A)'s order as under: i) "The AO failed to appreciate that the non-compete allowance of Rs. 1 crore received by the assessee was in respect of the hive off of its Condom Division and that the same was a capital receipt, not liable to tax. ii) The AO overlooked the fact that as per the High Court's order, the Joint Venture Agreement was sanctioned by the High Court and the same relates back to the appointment date which was 1st July, 1996. Therefore, the effective date of the transfer as per the settled position in law as enunciated by the Supreme Court in the case of Marshall Sons and Co. (India) Ltd vs ITO (223 ITR 809) would be 1st July, 1996. Accordingly, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reement would relates back to the effective date which is stated in the order itself. There, 17.96 is the actual date of the transfer and not the date of the order and for all practical purposes, all the entries related to A.Y. 97-98. Since, all the events took place in the A.Y. 97-98 itself, the impugned sum relates to A.Y. 97-98 and not to A.Y. 98-99. Therefore, no addition in this regard could be made in the year under consideration." 5. It is relevant to state that Ld. CIT(A) also relied on the decision of Hon'ble Apex Court in the case of Marshall Sons and Co. India Ltd. vs ITO 223 ITR 809 wherein Hon'ble Apex Court has held that date of amalgamation/transfer was the date with effect from which it is provided in the scheme of amalgamation that shall take place unless Court specifies any other date of amalgamation/transfer. It was held that where the court does not prescribe any such date but merely sanctions the scheme presented to it, it should follow that date of transfer is the date specified in the scheme as 'Transfer Date'. It is relevant to state that the case before us, the Hon'ble Bombay High Court approved the scheme of arrangement of transfer of Condom Divi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessee agreed to transfer its Condom Division with assets and liabilities and all rights including Industrial and other licences, permits, trade names, copy rights, trade marks marketing and distribution net work to JKAL. The Ld. AR referred to Clause 14.4 of Joint Venture Agreement, a copy of which is placed at page 109 of Paper book and submitted that pursuant to Joint Venture Agreement, it was agreed that assessee ceased to continue or initiate any business which was similar or would result in competition with the Condom Business of JKAL and for that purpose it was also decided to enter into a Non-Compete Agreement, which was entered into on 4.1.1997. That pursuant to non-compete agreement it was agreed that assessee to receive Rs. 1 crore by way of consideration. Besides, Raymond to receive non compete amount of Rs. 60 lakhs. Ld. AR referred to pages 49 to 59 of Paper Book which is a copy of Non Compete Agreement dt. 4.1.1997 entered into between Pacific Dunlop Ltd., the assessee-company and Raymond Ltd. The Ld. AR submitted that till the scheme was approved by Hon'ble Bombay High Court by its order dt. 31.7.1997, assessee company carried on business for and on behalf of JKAL....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o be considered in assessment year 1997-98 and not in assessment year 1998-99. He submitted that date of payment is not relevant. Ld. AR also submitted that AO himself assessed the capital gain in respect of shares allotted to assessee by JKAL on transfer of Condom business in assessment year 1997-98, even though shares were actually allotted in assessment year 1998-99 i.e. subsequent to approval of scheme by Hon'ble High Court. He submitted that order of Ld. CIT(A) to hold that said amount of Rs. 1 crore is to be considered in assessment year 1997-98 is in order. 7. We have carefully considered the submissions of Ld. Representatives of parties and have perused orders of authorities below. We have also perused relevant extract of Joint Venture Agreement dt. 17.12.1996 copy placed at pages 60 to 73 and 109 of paper book, copy of Non-Compete Agreement dt. 4.1.1997 placed at pages 49 to 59 and also scheme of arrangement filed before Hon'ble Bombay High Court placed at pages 75 to 80 of Paper book as well as Hon'ble High Court order approving the scheme placed at pages 81 to 89 of paper book and have also considered the relevant pages of Paper Book and the cases cited before ....