TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 1351
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....a Professional Collaboration Agreement (herein after referred to as 'PCA') on 20-04-2007 with Dr. A.M. Arun, Chairman, M/s. Vasan Eye Care Hospital. As per the PCA, both the parties agreed to form a new entity in the name and style of 'Vasan Eye Care Hospital Associate Partner of Prem's Eye Clinic'. The assessee transferred his existing clientele and goodwill to the new entity. In lieu of assessee transferring his goodwill, Dr. Arun agreed to pay a sum of Rs. 3,50,00,000/- to the assessee. Rs. 100,00,000/- was paid to the assessee at the time of signing the agreement and the remaining balance amount of Rs. 2,50,00,000/- was to be paid in twenty equal monthly instalments of Rs. 12.50 Lakhs each commencing from 1st May 2007. The assessee clai....
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....ot in the nature of capital receipts but extinguishment of rights to carry out his profession in the name of 'Dr. Prem's Eye Clinic'. The CIT(Appeals) held that the sum of Rs. 2.25 Crores received during the relevant AY is to be treated as receipts u/s.28(va). The assessee has come in second appeal before us impugning the order of the CIT(Appeals). 4. Shri B. Ramakrishnan, FCA appearing on behalf of the assessee submitted that the CIT(Appeals) has erred in coming to the conclusion that the moneys received by the assessee are in the nature of non-compete fee and not on account of sale of goodwill. The amount received on sale of goodwill is always capital in nature. The ld. AR further submitted that as per the provisions of section 55(2), g....
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....fession is not towards the goodwill but not to carry on the profession under the name 'Prem's Eye Clinic'. The ld. DR strongly prayed for the dismissal of the appeal of the assessee. 6. We have heard the submissions made by the representatives of both the sides and have perused the orders of the authorities below as well as the judgment relied on by the ld.AR. The assessee who is an ophthalmologist by profession was running his clinic and eye hospital under the name and style of 'Prem's Eye Clinic'. He entered into PCA on 20-04-2007 with Dr. A.M. Arun, Chairman, M/s. Vasan Eye Care Hospital. As per the covenants of the agreement, the assessee ceases to carry on his profession under the name and style of 'Prem's Eye Clinic' and form a new e....
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....ssion, or not competing with the new entity. Neither in Para No.10 of the PCA which gives the details of responsibilities of the assessee nor in any other part of the PCA it has been mentioned that the assessee cannot practice individually or compete with 'Vasan Eye Care Hospital Associate Partner of 'Prem's Eye Clinic'. Therefore, the contention of the DR that the payments made are in the nature of non-compete fee is not tenable. While determining the nature of agreement, it is necessary to stick to the terms and conditions as spelled out in the document rather than travelling beyond and drawing inferences by importing the sense which it does not intend to convey. 7. The assessee has admitted that the amount received in lieu of goodwill i....
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....usiness' to include in it 'profession' as well. If the expression 'business' is interpreted to include within its scope 'profession' as well, it would be doing violence to the provisions of the Act. Such interpretation would amount to first creating an imaginative lacuna and then filling it up, which is not permissible in law. The contention of the counsel for the appellant that s. 32(1)(iv) should be given purposive interpretation to include 'profession', has thus to be rejected". Thus, from the above, it can be safely construed that business and profession are two different streams and treatment has to be given differently in case the statue provides for taxing any income under the head 'business' only. A perusal of section 55(2)(a) which....