2007 (5) TMI 596

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....e assessee submitted that the ld CIT(A) has erred in giving a finding that the sum of Rs. 37,40,000/- received by the assessee as non compete fee was nothing but a camouflage and is actually a revenue receipt towards goodwill and is to be taxed. 4. The brief facts of the issue are that assessee entered into a non-compete agreement with Madras Carbon Brushes Pvt. Ltd, Whereby assessee transferred the entire business along with the assets and liabilities except land and building. In consideration of this transfer the assessee received a sum of Rs. 37,40,000/- and assessee treated it as capital receipt not offered to tax. The same was accepted by the Assessing Officer, while concluding assessment under section 143(3). Later the CIT(A) exerc....

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....akhs fifty thousand one hundred and forty three and paise six only) be either paid as cash or by way of issue of shares in MCB as per the valuation approved by MC and MCB. MCB have verified the condition of plant and machinery along with other current assets such as stock-in-trade, deposits, bank balances and current liabilities and hereby warrant that the sale or transfer to them of the assets in particular stock and machinery is" as where is condition" with no recourse to MC. Transfer of Goodwill MC has in the last 25 years have established goodwill both the customers and in the market and MC do hereby confirm that MCB will be entitled to carry on the business of manufacture of products under any trade name, with either old or ne....

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....se, either directly or indirectly." 6. The assessee received a total consideration of Rs. 69,98,43,06. The assessee has received consideration as follows:- "MCB agrees to pay for the transfer of assets subject to the liabilities taken over by the MCB from MC, a sum of Rs. 68,90,143.06 (rupees sixty eight lakhs ninety thousand one hundred and forty three and paise six only) including the non-competing compensation as mentioned in clause 04.03., in the following manner: Towards transfer of business networth (assets and liabilities as mentioned in the schedule) Rs. 31,50,000 (Rupees thirty one lakhs and fifty thousand only) by way of issue of shares in MCB on the face value and the balance of Rs. 143.06 by way of cash. Toward....