2003 (11) TMI 41

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....velu J.-The substantial questions of law involved in this case are as follows: "(i) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the sum of Rs. 8.6lakhs received by the assessee and covered by the termination agreement cannot constitute the income of the assessee? (ii) Whether, on the facts and in the circumstances of the ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....f Income-tax (Appeals) confirmed the same. The Tribunal, on further appeal, treated it as a capital receipt and not liable for taxation. Now, we have to see as to whether it is a. taxable revenue receipt or a capital receipt? Admittedly, the said amount of Rs. 8.6 lakhs was part of the receipt of Rs. 42 lakhs, towards compensation for cost of trained manpower (Rs. 11 lakhs), towards compensa....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ination agreement and as a consideration for the transfer of profit earning apparatus, which will constitute the source for income, profit or gain. The receiver assessee would, as a result, be precluded in future from exploiting the source of income by utilising the profit-earning apparatus. When such a tie with the above apparatus is totally snapped thus making the assessee crippled or impaired o....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....tilised by the assessee. The entire trained manpower and customer network were handed over to the other party to the agreement. In such a situation, the payment received by the assessee had the imprint of a capital receipt. The assessee had a well developed large-scale organisation and marketing network and had given a go by to the enjoyment of good profits that they had in all these years till th....