TaxTMI 
TaxTMI 
2023 (4) TMI 1442
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.... and at the time of partition, various branches of the family migrated to India and settled in different parts of India like Shimla, Chandigarh, Delhi, Lucknow, Calcutta, Bombay etc., where every one was carrying on his own business of manufacturing ice-cream and running of restaurants. The Chandigarh branch of the family started manufacturing ice-cream under the brand name "Kwality" and the ice-cream was being sold in the following territories:- Towns Cities Himachal Pradesh Parwanoo Haryana Hissar, Fatehabad, Panchkula, Sirsa, Shahbad, Pipli, Kurukshetra, Kaithal, Pinjore, Karnal (Haryana Tourist Complex only), Yamunanagar Punjab Rahpura, Patiala, Sangrur, Gobindgarh, Kurali, Ropar, Nangal, Mohali (SAS Nagar). U.P. Saharanpur On account of differences that arose between Lambas at Chandigarh (the assessee) and Shri P.L. Lamba Group of Delhi, the latter opened a factory at Ludhiana in 1968 and started manufacturing ice-cream with the ostensible purpose of selling the ice-cream in the areas of the assessee group. Probably, the Lambas of Delhi wanted to wrest the business from the assessee group at Chandigarh. A writ was filed in the Himachal Pradesh ....
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....Kota (ii) Kwality Ice-cream Company (P) Ltd., Jaipur (iii)Rake Foods Industries, Jammu (iv)Hukson Foods India (P) Ltd., Varanasi, U.P. Later on, the assessee entered into an agreement (MOU) with Shri P.L. Lamba Group of Delhi on 31.05.1995 for; (i) Relinquishment of Trade Mark user right and interest; and (ii) Termination of ice-cream manufacturing facilities under the brand name 'Kwality'. As per the said agreement, the assessee could not use the trade mark 'Kwality' w.e.f. 01.06.1995 and had to stop manufacturing operation of the ice-cream. At the time of signing of the said agreement, a sum of Rs. 10 Lakhs was paid to the assessee vide cheque dated 31.05.1995. Further, a sum of Rs. 35 Lakhs was paid to the assessee vide demand draft dated 07.07.1995. The balance amount of Rs. 10 Lakhs was also paid to the assessee on 19.08.1995. As per MOU dated 31.05.1995, final agreement was to be entered into between the parties. On the basis of negotiations and discussions with the representatives of Brooke Bond Lipton India Ltd. and other concerned parties, the agreement entered on 31.05.1995 was considered tobe hurried agreement and formal agreement was decide....
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.... to manufacture ice-cream and other products in the 'Kwality' brand name and had been debarred in perpetuity to manufacture ice-cream in any other name. Since the assessee had lost the source itself, the receipt of Rs. 55 lakhs was taken as a capital receipt. With respect to Rs. 10 lakhs, it was held that the assessee had himself apportioned the said amount on account of goodwill, which was liable to tax under the head "capital gains". The balance amount of Rs. 45 lakhs had been held to have been received for the assignment/sale of income earning apparatus and for non-competition and therefore, a capital receipt was not liable to tax. Aggrieved by the order of Commissioner of Income Tax (Appeals), the revenue filed an appeal before the Tribunal. The Tribunal, after going through the facts of the case, returned a finding that there was no dispute about the receipt of Rs. 55 Lakhs. The dispute relates to the nature of the said receipt. The Tribunal examined the agreement dated 14.10.1994 executed between P.L. Lamba Group of Delhi and Brooke Bond Lipton India Ltd. (unit of H.L.L.). By virtue of this agreement, P.L. Lamba Group of Delhi had undertaken to procure franchisees marke....
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..... Lamba Group of Delhi and the assessee have been reiterted, the assessee had been specifically allowed to use the name of 'Kwality' without using the star-burst for six existing restaurants and future establishments of hotel/restaurant business which were in pipeline at various stations at that time. The Assessing Officer had recorded a finding that a sum of Rs. 55 Lakhs received by the assessee is from P.L. Lamba Group of Delhi and not from Brooke Bond Lipton India Ltd. or M/s Digital Securities Pvt. Ltd. He further recorded a finding that the agreement between the assessee, P.L. Lamba Group of Delhi, M/s Digital Securities Pvt. Ltd., Bombay and Brooke Bond Lipton India Ltd., Calcutta was a device to give colour to the transaction for the purpose of tax avoidance. The payment was agreed to be paid to the assessee by P.L. Lamba Group of Delhi by virtue of memorandum of understanding dated 31.05.1995 and this memorandum was made basis to complete further transactions with M/s Digital Securities Pvt. Ltd and Brooke Bond Lipton India Ltd. Thereafter, the Tribunal came to a conclusion that the assessee had accepted payment of Rs. 55 lakhs as per agreement and the formal agreement exec....
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....tion. It was observed that a bifurcation in respect of four concerns between the trade mark and other rights was indicated in the agreement as reproduced in the order. Taking the ratio of 30%, the Tribunal was of the view that it would be just and reasonable to apportion Rs. 15 lakhs out of the total consideration of Rs. 55 lakhs towards the goodwill/trade name/trade marks and the remaining amount on account of surrender of right to manufacture ice-cream and other allied products under the brand name 'Kwality.' A direction was given to the Assessing Officer to complete the amount assessable to tax. The appeal of the revenue was partly allowed. This order is under challenge in the present appeal. The only short point for consideration in the present appeal is, whether the Tribunal was right in bifurcating the amount of Rs. 15 lakhs instead of Rs. 10 lakhs for goodwill/trade name/trade marks, out of total amount of Rs. 55 lakhs. The Tribunal has observed that the revenue authorities did not take any exercise for determining the value of goodwill of the assessee at the time of surrender. The assessee has not given any basis for valuation of its goodwill for manufacture of ice-cr....