2024 (5) TMI 1083

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.... advocate for the respondent. 2. Under an agreement dated 03.05.1986, the owner namely, M/s. ELEL Hotels & Investment Ltd. (hereinafter referred to as 'ELEL') granted licence to the respondent herein i.e., ITC to operate the hotel 'Sea Rock' from the first day of July, 1986 for a period of 25 years with an option to renew the licence for a further period of 25 years on giving notice to ELEL of such intention of not less than 24 months before the expiry of the licence. The licence fees was to be calculated @ 23% on the gross turn-over of the Sea Rock Hotel to ELEL for each financial year, subject to certain conditions. The respondent had right to terminate the contract by giving not less than 24 calendar months notice to ELEL. The respond....

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....reement dated 03.05.1986, was determined at Rs.32.42 crores which was again reduced in writing by an award of the sole Arbitrator (Mr. H. Suresh) dated 11.05.2005. 4. The aforesaid amount of Rs.32.42 crores is the amount in dispute in the present appeal. While the respondent, ITC treated this amount as a capital receipt and accordingly paid tax on capital gain. The Assessing Officer treated it as revenue receipt and according levied tax by assessment order dated 31.12.2009 under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act, 1961') relating to the assessment year 2006-07. 5. In appeal filed by the respondent ITC before the CIT[Appeal], the appeal was allowed and the receipt of the aforesaid amount of ....

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....he absence of any asset, no question can arise for relinquishment of any right, title or interest in the immovable property in question. Under the circumstances, by no stretch of imagination, the receipt of Rs.32.42 crores can be said to be capital receipt. On the contrary, on bare reading of various clauses of the agreement dated 3.5.1986, it is clearly a revenue receipt. Licence in question excluded any interest in the property i.e., the hotel. Licence has not conferred upon the respondent any right, title or interest in the property in question. Hence, the amount received by the respondent under settlement is not a capital receipt but a revenue receipt. iii] In support of his submission he relies upon judgment of Hon'ble Supreme....