AI Drafter 
TaxTMI 
TaxTMI 
2024 (10) TMI 261
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....umstances of the case and in law, the Appellate Tribunal has erred in deleting the addition on account of termination of bottling license as capital receipt of Rs.4,30,34,088/- & Rs. 1,50,00,000/- is not taxable u/s 28(iv)/28(νa) or alternatively u/s 45 of the IT Act? C). Whether on the facts and circumstances of the case and in law, the Appellate Tribunal has erred in restricting the disallowance of Rs.25,31,640/-made 20% of total purchases of raw material to 10%" 2. The brief facts of the case are as follows :- 2.1 The Assessee-Respondent Company is engaged in the business of Manufacturing of beverages & foods products. The assessee filed the return of income on 14.11.2007 for the assessment year 2007-2008 declaring total loss of Rs.1,26,23,824/- . 2.2 The case of Assessee-Respondent company was selected for scrutinizing under Section 143(2) of the Act vide notice dated 15th September, 2008. The Assessing Officer in absence of necessary evidences framed assessment under Section 144 read with Section 143(3) of the Act vide order dated 24th December, 2009 wherein the Assessing Officer assessed the income of the assessee at Rs.9,48,78,035/- . 2.3. The followi....
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....Rs.18,523/ being TDS payable, the TDS payable, the AO has proposed in the remand remand report that the TDS has not been deposited in the Government account, the related expenditure of Rs. 8,30,410/- should be disallowed u/s.40(a)(ia) of the I.T Act which was disallowed and added to the total income of the assessee by the Ld. CIT(A) in view of the judgment of Hon'ble Gujarat High Court in case of Saheli Synthetic. Therefore, the income is enhanced accordingly to this extent. 7.2 For Sr. No.V of other liabilities of Rs.33,98,647/- which includes interest payables of Rs.32,05,445/- salary payable of Rs. 63,091/- and expenses payable of Rs.1,30,111/-, out of which an amount of Rs.32,05,445/- & an amount of Rs.1,30,111/- being expenses payable had deleted by the Ld. CIT(A). 7.3 On Sr. No.VI issue related to addition of Rs.7,01,39,947/- which includes Deposit from debtors of Rs.9,000/-, Sundry debtors Rs.2,01,30,947/- & the sum of Rs.5,00,00,000/- received from Hindustan Coca Cola. Out of which an amount of Rs.9,000/- upheld and Rs.2,01,30,947/- deleted. However, on the issue of sum of Rs. 5,00,00,000/- received from Hindustan Coca Cola, CIT(A) has stated that rece....
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....ct which does not affect the trading structure of his business, nor deprive him of what in substance is his source of income, termination of the contract being a normal incident of the business and such cancellation leaves him free to carry on his trade (freed from the contract terminated), the receipt is revenue : Whereby the cancellation of an agency, the trading structure of the assessee is impaired, or such cancellation results in loss of what may be regarded as the source of the assessee's income, the payment made to compensate for cancellation of the agency agreement is normally capital receipts. Considering the aforesaid principles laid down as per article XVIll of the principal agreement, the amount received by the assessee was for the consideration for giving up his right to purchase and/or to operate the property or for getting it on lease before it was transferred or let out to other persons. It was not for settlement of rights under trading contract, but the injury was inflicted on the capital asset of the assessee and giving up the contractual right on the basis of principal agreement had resulted in loss of source of the assessee's income. Therefore, ....
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.... as reproduced below: "B. WHEREAS, Surbhi executed a Bottler's Agreement with The Coca-Cola Company, a corporation organized and existing under the laws of the State of Delaware, United States of America dated 24 February, 2001 (hereinafter referred to as the "Bottler's Agreement"), pursuant to wrrich7Anfer a/is, Surbhi was authorized to prepare and package the Beverages (as defined therein) in Authorized Containers (as defined therein) at the said Facility for exclusive sale to the Company. The initial term of the Bottler's agreement expired by efflux of time on 24 March, 2004. However, the expiry notwithstanding the parties thereto continued to act upon the same terms and conditions. C. WHEREAS in connection with the Bottler's Agreement, sales of the beverages were made by Surbhi to the Company on the basis of purchase orders issued from time to time by the Company. D. "WHEREAS certain claims, counter-claims and disputes arose between Surbhi and the Company in relation to the purchase orders issued pursuant to the Bottler's Agreement. These disputes resolution. are presently pending resolution. Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx....
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....e raw material listed in annexure 3 to the company against the consideration. 6. The assessee waives/abandons its right to seek any legal remedy against the company or its associates. It was agreed between the parties to avoid expensive and time consuming legal proceedings. 7. In the event of any breach of any clause of the agreement, the company shall terminate the main settlement agreement and will be entitled to recover from the assessee all the money paid by it in pursuance to the main settlement agreement. 25.9 A conjoint reading of the above clause reveals the fact that the arrangement between the assesse and the company has come to an end which certainly re-presents the loss of source of revenue/ Income to the assessee in substance. Merely, the word termination has not been used in the settlement agreement does not imply that the compensation was not paid against the termination of the contract. As such in substance, the assessee was working exclusively for the Coca-Cola group and once the compensation received by it in pursuance to the main settlement agreement certainly represents the compensation for the loss of revenue to the assessee. 25.10 Admit....
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....ending on 31st March, 2009 and 2010 for the subsequent years. In view of the above concurrent findings of facts, we are of the opinion that the Tribunal has rightly followed the decision of the Hon'ble Apex Court in case of Oberoi Hotel (P) Ltd. Vs. Commissioner of Income Tax reported in [1999] 103 Taxman 236 (SC) wherein in similar facts it is held as under:- "8. The aforesaid judgment was considered in the case of Kettlewell Bullen & Co. Ltd. v. Commissioner of Income Tux, Calcutta, (1964) 53 ITR 261, wherein the Court has held as under : "Whether a particular receipt is capital or income from busi-ness, has frequently engaged the attention of the courts. It may be broadly stated that what is received for loss of capital is a capital receipt; what is received as profit in a trading transaction is taxable income. But the difficulty arises in ascertaining whether what is received in a given case is compensation for loss of a source of income, or profit in a trading transaction." 9. Alter considering various decisions it was further held as under : "These cases illustrate the principle that compensation for injury to trading operations, arising fr....