TaxTMI 
TaxTMI 
2015 (11) TMI 388
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....The impugned order disposes of cross-appeals as well as cross-objections relating to the assessment year 1999-2000. 2. Although numerous questions have been formulated Mr. Pinto, learned counsel for the Revenue, at the time of admission, urges that two issues arise in this appeal as under : "1 Whether, on the facts and circumstances of the case and in law, the Tribunal was justified in holding that non-compete consideration received by the assessee is not liable to tax as capital gains even after the amendment to section 55(2)(a) of the Act with effect from April 1, 1998, which introduced the words 'or a right to manufacture, produce or process any article or thing' ? 2 Whether, on the facts and circumstances of the case an....
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.... only with effect from the assessment year 2003-04 consequent to the introduction of sec tion 28(va) into the Act. The impugned order relies upon the decision of the Supreme Court in Guffic Chem. Pvt. Ltd. v. CIT [2011] 332 ITR 602 (SC) wherein it has been observed as (page 606) : "The position in law is clear and well-settled. There is a dichotomy between receipt of compensation by an assessee for the loss of agency and receipt of compensation attributable to the negative/restrictive covenant. The compensation received for the loss of agency is a revenue receipt whereas the compensation attributable to a negative/ restrictive covenant is a capital receipt . . . One more aspect needs to be highlighted. Payment received as non-competit....
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....the nature of capital receipt. In fact, in order to put an end to the litiga tion, Parliament stepped in to specifically tax such receipts under non-competition agreement with effect from April 1, 2003." (d) Moreover, section 55(2)(a) of the Act would have no application in the present circumstances, as it deals with the cost of acquisition in relation to a capital asset which includes a right to manufacture or carrying on busi ness. In the present case, the agreement prohibits the assessee inasmuch as it amounts to giving up its right to carry on business, i.e., a restrictive cov enant. It held that such restrictive covenant stands covered only with effect from April 1, 2003, on introduction of section 28(va) of the Act. (e) In view ....
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....ing Officer has no power to disturb the profits in the profit and loss account as except to the extent provided in the Explanation to section 115JA. (c) On further appeal by the Revenue the Tribunal by the impugned order dismissed the Revenue's appeal. The impugned order places reliance upon the decision of the apex court in Apollo Tyres Ltd., wherein it was held that it is not open to the Assessing Officer to question the correctness of the profit and loss account when the same have been prepared in accordance with the provisions of the Companies Act, duly scrutinised by the auditors, approved by the general body of shareholders and filed with the Registrar of Companies. The apex court held that the Assessing Officer has limited pow....