SATYAM FOOD SPECIALTIES PVT. LTD., NEW DELHI V. DCIT, Jaipur

ITA 225/JPR/2013

• Counselvise Citation: 22523114 RSA 2013
• Duration Of Justice: 1 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 05-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROLEE AGARWAL CIT DR DHK
• Keywords: Capital asset; Business income; Search and seizure; Document seized; Cost of acquisition; Capital receipt; Documents seized
• Section: 143(3); 2(14); 153A; 234B; 12A; 147; 148; 132; 28; 11; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 225/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 M/S. SATYAM FOOD SPECIALITIES (P) LTD. (NOW KNOWN AS KARMIC BUSINESS SPECIALITIES (P) LTD. ) 1517, DEVIKA TOWERS, 6, NEHRU PLACE, NEW DELHI- 110 019 CUKE VS. THE DCIT CENTRAL CIRCLE- 2 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AADCK 6335 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI AJAY WADHWA & SHRI RANJAN CHOPRA , C.A. JKTLO DH VKSJ LS@ REVENUE BY: SMT. ROLEE AGARWAL, CIT -DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 07/01/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 27/02/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE LD. CIT(A)-CENTRAL, JAIPUR DATED 29-12-2012 FOR THE ASS ESSMENT YEAR 2009-10 WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS . ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 2 1. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS) (CENTRAL) JAIPUR DATED 29.12.2012 IS BAD IN LAW AND ON FACTS. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE NOTICE U/S 153C ISSUED ON 10.08.2011 IS ILLEGAL AS NO INCRIMINATING MATERIAL BELONGING TO THE APPELLANT C OMPANY WAS FOUND/SEIZED DURING THE COURSE OF SEARCH ON 31.07.2 009 CONDUCTED IN THE CASE OF CABANA GROUP OF CASES AND CONSEQUENT LY, THE ASSESSMENT MADE U/S 143(3) READ WITH SECTION 153C D ATED 31.01.2012 IS ALSO ILLEGAL AND DESERVES TO BE SET A SIDE/QUASHED. 3. THAT THE ASSESSMENT MADE U/S 143(3) R.W.S. 153C IS ALSO INVALID ON THE GROUND THAT NO REASONS U/S 153C WERE RECORDED BY THE ASSESSING OFFICER BEFORE ISSUE OF NOTICE CAL LING FOR RETURN OF INCOME UNDER THE PROVISIONS OF SAID SECTION. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ADDITION OF RS. 8,16,22,040/- MADE BY THE AO ON THE GROUND THAT THE SAME IS TAXABLE AS REVENUE RECEIPT INSTEAD AS A CAPITAL ACC OUNT WITHIN THE MEANING OF SECTION 28(II)(C) OR SECTION 28(VA) OF T HE I.T. ACT, 1961. 5. THAT THE LD. AO HAS ERRED IN LEVYING INTEREST U/ S 234A, 234B AND 234C OF THE I.T. ACT. 2.0 BRIEF FACTS ARE THAT ASSESSEE HAD BUSINESS RELA TIONS WITH ONE CABANA GROUP OF JAIPUR WHICH WAS SEARCHED BY THE I T DEPAR TMENT ON 31-7-2009. ACCORDING TO AO FROM ONE OF THE GROUP ENTITYS PREM ISES NAMELY CABANA HOSPITALITY LTD. (FOR SHORT CHL) DOCUMENTS WERE ALS O SEIZED INDICATING THAT ASSESSEE HAD TRANSFERRED HUGE FUNDS FROM THE A SSESSEE. ON THE BASIS ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 3 OF THESE DOCUMENTS AO OF CABANA GROUP FORMED A BELI EF THAT THESE DOCUMENTS BELONGED TO ASSESSEE IN QUESTION AND REPR ESENTED ITS UNDISCLOSED INCOME IN TERMS OF SEC 153C. ON THE BAS IS THEREOF A SATISFACTION NOTE U/S 153C WAS RECORDED SENT TO ASS ESSEES AO. CONSEQUENTLY NOTICES U/S 153C FOR FILING THE RETURN S WERE SERVED ON THE ASSESSEES. ASSESSEE CHALLENGED THE NOTICES U/S 153 C BEFORE HONBLE RAJSTHAN HIGH COURT BY CIVIL WP NO. 13704/2011 WHIC H WAS FINALLY DISMISSED AS WITHDRAWN BY ASSESSEE VIDE ORDER DATED 23-01-2012. ASSESSEE FILED THE RETURN U/S 153C DECLARING A DEPR ECIATION LOSS OF RS.(-) 1,80,94,965/- ON 22-12-2011. ACCORDING TO AO THE BR IEF FACTS OF ASSESSEES BUSINESS RELATIONS WITH CHL ARE AS UNDER :- THE ASSESSEE COMPANY M/S. SATYAM FOOD SPECIALITI ES (P) LTD. (NOW, M/S. KARMIK BUSINESS SPECIALTIES (P) LTD. SA TYAM) WAS INCORPORATED IN 1992 IN THE STATE OF RAJASTHAN. THE COMPANY ENTERED INTO A FRANCHISEE SOFT DRINK BOTTLING AGREEMENT WIT H CADBURY SCHWEPPES BEVERAGES INDIA (P) LTD. (HEREINAFTER REF ERRED TO AS CSBIPL) ON 5-11-1997. IT SET UP AN EXCLUSIVE PLANT ONLY TO MEET THE REQUIREMENT OF CADBURYS PRODUCTS FOR THE STATE OF RAJASTHAN WHICH COMMENCED OPERATIONS ON 02-05-1999 IN TERMS OF THE ABOVE REFERRED AGREEMENT. VIDE THIS AGREEMENT RIGHTS WERE GRANTED TO SATYAM TO MANUFACTURE, FILL INTO AUTHORIZED CONTAINERS AND TO SELL THE PRODUCTS IN THE STATE OF RAJASTHAN. SUBSEQUENTLY ON 12-12-1998, M/S. SATYAM WEE INFORMED THAT CSBIPL HAS AGREED TO SELL ITS SOFT DR INK BRANDS TO M/S. COCO COLA COMPANY. VIDE LETTER DATED 28-06-1999 SAT YAM WAS ALSO INFORMED THAT M/S. COCO COLA COMPANY WOULD ALSO HON OUR AL THE EXISTING AGREEMENTS WITH CSBIPL. IT WAS ALSO INFORM ED M/S. COCO COLA INDIA (P) LTD. THAT ALL THE BRANDS OF CADBURY SCHWEPPES IN INDIA SHALL BE ACQUIRED BY M/S. ATLANTIC INDUSTRIES, A CO MPANY INCORPORATED UNDER THE LAWS OF THE CAYMAN ISLAND, CARIBBEAN (ATL ANTIC) AND THAT ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 4 THE AGREEMENT DATED 5-1-1997 BETWEEN SATYAM AND CSB IPL STOOD ASSIGNED TO ATLANTIC. IN OCTOBER, 1999, SATYAM WAS INTIMATED BY COCO COLA INDIA (P) LTD. THAT ATLANTIC INDUSTRIES, A WHO LLY OWNED SUBSIDIARY OF COCO COLA COMPANY, USA SHALL BE THE OWNER OF SCH WEPPES BEVERAGES TRADEMARKS AND RELATE4D INTELLECTUAL RIGH TS. THERE HAD BEEN SOME DISPUTES WITH REGARD TO SALE OF SCHWEPPES BEVE RAGE PRODUCTS BECAUSE M/S. COCO COLA COMPANY INDIA WAS NOT INTERE STED IN ENCOURAGING THE SALE OF SCHWEPPES BRAND TO AVOID CO MPETITION TO ITS OWN PRODUCTS. DUE TO THIS SATYAM SUFFERED HUGE LOSS ES AND THEREFORE, IN 2008 SATYAM FILED A COMPLAINT U/S 36 OF MONOPOLI ES AND RESTRICTIVE TRADE PRACTICES ACT (MRTP) BEFORE THE MRTP COMMISSI ON, NEW DELHI. THEY ALSO FILED APPLICATION U 12 AND 12A OF MRTP ACT. AN ARBITRATION APPLICATION U/S 11 OF THE ARBITRATION A ND CONCILIATION ACT OF THE HIGH COURT RAJASTHAN WAS ALSO FILED BY THE ASSESSEE. SUBSEQUENTLY, ON 24-1-2008, SATYAM ENTERED INTO AGR EEMENTS. ONE WITH ATLANTIC, CALLED SETTLEMENT AGREEMENT VIDE WHI CH THE BOTTLING AGREEMENT DATED 05-11-1997 WAS TERMINATED ON A SETT LEMENT AMOUNT OF RS. 18,33,11,020/-. OUT OF THIS A SUM OF RS. 5 C RORES HAD BEEN PAID IN ADVANCE AND BALANCE WAS PAID ON15-12-2008. AS A PART OF THIS SETTLEMENT AGREEMENT ON THE SAME DAY I.E. 24-11-200 8, THE ASSESSEE ALSO ENTERED INTO ANOTHER AGREEMENT CALLED ASSET TR ANSFER AGREEMENT WITH M/S. COCO COLA INDIA (P) LTD. VIDE WHICH THE A SSESSEE SOLD ALSO ITS ASSETS AS SPECIFIED IN SCHEDULE A OF THE AGREEM ENT INCLUDING ITS RIGHTS, TITLES, AND INTERESTS IN THE IMMOVABLE PROP ERTY TO M/S. COCO COLA INDIA (P) LTD. FOR A CONSIDERATION OF RS. 5,9 4,57,684/-. FURTHER AS A PART OF SETTLEMENT AGREEMENT A CONVEYANCE DEED WAS MADE BETWEEN THE ASSESSEE AND COCO COLA INDIA (P) LTD. O N 07-01-2009 VIDE WHICH RS. 4,23,31,296/- WAS RECEIVED BY THE AS SESSEE COMPANY AS FULL AND FINAL SETTLEMENT AND PAYMENT IN RESPECT OF THE IMMOVABLE PROPERTY. THE AMOUNTS RECEIVED BY THE ASSESSEE COMP ANY ARE TABULATES BELOW:- S.N. AGREEMENT AMOUNT RECEIVED REMARK 1. SETTLEMENT AGREEMENT 18,3,11,020/- 2. ASSET TRANSFER AGREEMENT 5,94,57,684/- 3. CONVEYANCE DEED 4,22,31,296/- SETTLEMENT AGREEMENT INCLUDES RECEIPTS ON ACCOUNT OF ASSET TRANSFER AGREEMENT, RECEIPTS ON ACCOUNT OF ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 5 CONVEYANCE DEED AS WELL AS OTHER RECEIPTS IN VIEW OF THE ABOVE MENTIONED AGREEMENTS, SATYAM H AD TRANSFERRED ITS BOTTLING BUSINESS ASSETS AS WELL AS IMMOVABLE PROPERTY TO M/S. COCO COLA INDIA (P) LTD. THE ASSESSEE COMPA NY TREATED THE AMOUNT OF RS. 18.33 CRORES RECEIVED FROM ATLANTIC A S A CAPITAL RECEIPT AND TRANSFERRED IT TO THE RESERVE AND SURPLUS ACCOU NT IN ITS BALANCE SHEET AS ON 31-03-2009. THE AO ISSUED A SHOW CAUSE NOTICE AS TO WHY THE SAI D RECEIPTS OF RS. 18.33 CRS. SHOULD NOT BE TREATED AS REVENUE REC EIPT, ASSESSEE FILED A DETAILED REPLY WHICH IN SUM AND SUBSTANCE CONTENDED THAT:- I. THE ENTIRE COMPENSATION RECEIVED BY THE APPELLAN T WAS IN LIEU OF WITHDRAWING THE RIGHT TO SUE AGAINST ATLANTIC/COCA COLA. ANY AGREED COMPENSATION RECEIVED FOR WITHDRAWING THE RIGHT TO SUE IS PATENTLY A CAPITAL RECEIPT. THE SAME IS OUTSIDE THE PURVIEW AN D SCOPE OF TAXATION AS BUSINESS OR REVENUER RECEIPT AS CONTEMPLATED BY THE PROVISIONS OF THE I T ACT. II. THE COMPENSATION RECEIVED BY WAY OF SETTLEMENT AGREEMENT IS WHOLLY AND EXCLUSIVELY IN LIEU OF THE ASSESSEE WITH DRAWING ALL THE CASES FILED AGAINST ATLANTIC/COCA-COLA. III. THE LIST OF LEGAL PROCEEDINGS INSTITUTED AGAIN ST ATLANTIC/COCA COLA QUA WHICH THE SETTLEMENT WAS ARRIVED AT IS AS UNDER - S.NO. PARTICULARS 1 COMPLAINT/UTP NO. 94/2008 UNDER SECTION 36 OF MRT P ACT, BEFORE MRTP COMMISSION, NEW DELHI FILED BY M/S SATYAM FOOD SPECIALTIES PVT. LTD. 2 APPLICATION FILED UNDER SECTION 12A OF MRTP ACT, BEFORE MRTP COMMISSION, NEW DELHI ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 6 3 APPLICATION FILED UNDER SECTION 12 OF MRTP ACT, B EFORE MRTP COMMISSION, NEW DELHI 4 ARBITRATION APPLICATION NO. 19/2008 FILED UNDER S ECTION 11 OF THE ARBITRATION AND CONCILIATION ACT, BY SATYAM FOOD SPECIALTIES PVT. LTD. BEFORE THE RAJASTHAN HIGH COU RT THE CASES WITH MRTP WERE FILED TO BRING HOME THE PO INT THAT COCA COLA WAS MONOPOLISTIC IN ITS APPROACH AND WAS KILLING CO MPETITION. THE RELEVANT PARAS OF THE SETTLEMENT AGREEMENT READ TOG ETHER DEMONSTRATE THAT THE COMPENSATION WAS RECEIVED MERELY FOR WITHDRAWAL OF LITIGATION. SUCH COMPENSATION WAS PATENTLY CAPITAL RECEIPT AND CANNO T BE CONSIDERED TAXABLE REVENUE RECEIPTS IN TERMS OF ANY PROVISION OF I T ACT. THE AO HOWEVER DID NOT AGREE WITH ASSESSEES SUBMISSIONS A ND HELD THAT ENTIRE RECEIPT WAS NOT REVENUE IN NATURE. CONSEQUENTLY AO SPLIT THE COMPENSATION INTO TWO PARTS, ONE WAS HELD CAPITAL R ECEIPT AND OTHER PART OF RS. 8,16,22,040/- WAS HELD AS REVENUE IN NATURE U/S 28(II)C, AS ACCORDING TO AO, THE ASSESSEE HAS RECEIVED IT IN C ONSIDERATION OF TERMINATING THE AGENCY HELD OR MODIFICATION OF TERM S THEREOF. RELEVANT OBSERVATIONS OF AO IN THIS BEHALF ARE AS UNDER: ON ANALYSIS THE ABOVE MENTIONED IMPORTANT TERMS AND CONDITIONS, IT HELD THAT THE AMOUNT OF RS. 18.3 3 CRORES RECEIVED PARTAKE NOT JUST THE CHARACTER OF A CAPITAL RECEI PT BUT ALSO HAS AN ELEMENT OF REVENUE RECEIPT AND IN THAT SENSE THE AMOUNT RECEIVED CAN BE SAID TO BE OF COMPOSITE NATURE HAVING BOTH THE ELEMENTS OF CAPITAL AND REVENUE. BEING SO, THE CAPITAL COMP ONENT COMPRISES OF THE AMOUNTS RECEIVED ON ACCOUNT OF TR ANSFER OF ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 7 CAPITAL ASSETS SUCH AS THE PLANT AND MACHINERY UNDE R THE TERMS OF THE AFORESAID ATA AMOUNTING TO RS. 5.94 CRORES AS W ELL AS THE TRANSFER OF THE IMMOVABLE PROPERTY SUCH LAND AND BU ILDING BY MEANS OF A CONVEYANCE DEED AMOUNTING TO RS. 4.22 CR ORES. THUS, THE TOTAL CAPITAL COMPONENT OF THE AMOUNT RECEIVED BY THE ASSESSEE COMPANY IS RS. 10.16 CRORES [5.94+4.23]. THE BALANC E AMOUNT OF RS. 8.16 CRORES [18.33 10.17] IS HENCE, THE REVE NUE RECEIPT OF THE ASSESSEE BECAUSE THE ASSESSEE HAS BEEN COMPENSA TED FOR THE LOSSES SUFFERED BY IT IN PAST YEARS AS WELL AS BREA CH OF OTHER TERMS OF CONTRACT/ AGREEMENT. 8.6 TAXABILITY OF REVENUE RECEIPT ONCE IT HAS BEEN ESTABLISHED THAT RS. 8.16 CRORES H AS BEEN RECEIVED BY THE ASSESSEE COMPANY AS REVENUE RECEIPT, IT IS E SSENTIAL TO EXAMINE THE TAXABILITY OF THE SAME UNDER THE PROVIS IONS OF THE ACT. THIS AMOUNT IS IN THE NATURE OF COMPENSATION AND / OR OTHER PAYMENT RECEIVED BY THE ASSESSEE COMPANY AS HAS BEE N ESTABLISHED IN THE PRECEDING PARAGRAPHS. THE TAXABILITY OF THE REVENUE COMPONENT OF RS. 8.16 CRORES IS COVERED BY THE PROV ISIONS LAID DOWN IN SECTION 28(II) OF THE I.T. ACT .THE SAME I S REPRODUCED BELOW- 28. PROFITS AND GAINS OF BUSINESS OR PROFESSION THE FOLLOWING INCOME SHALL BE CHARGEABLE TO INCOME- TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION .- (II) ANY COMPENSATION OR OTHER PAYMENT DUE TO OR RE CEIVED BY:- . ANY PERSON, BY WHATEVER NAME CALLED, HOLDING AN AGENCY IN INDIA FOR ANY PART OF THE ACTIVITIES RELA TING TO THE BUSINESS OF ANY OTHER PERSON, AT OR IN CONNECTION W ITH THE TERMINATION OF THE AGENCY OR THE MODIFICATION OF TH E TERMS AND CONDITIONS RELATING THERETO. IN THE LIGHT OF THE DISCUSSION IN PRECEDING PARAGRA PHS, IT IS CONCLUSIVELY HELD THAT THE RECEIPT TO THE TUNE OF R S. 8.16 CRORES IS A ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 8 REVENUE REFEIPT AND IS TREATED AS BUSINESS INCOME O F THE ASSESSEE U/S 28(II) OF THE ACT. SINCE THE ASSESSEE HAS CONCEALED PARTICULARS AND/OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME, THE REFORE, PENALTY PROCEEDINGS U/S 271(1)(C ) OF THE ACT ARE INITIATED AGAINST THE ASSESSEE. 9. SUBJECT TO THE ABOVE DISCUSSION, THE TOTAL INCOM E OF THE ASSESSEE IS COMPUTED AS UNDER:- LOSS DECLARED IN RETURN (-) 1,80,94,965 ADD: AS PER PARA 8, SUPRA 8,16,22,040 NET INCOME 6,35,27,075 LESS: SET OFF/ B/F LOSS FOR A.Y.2001- 02 TO 2008-09 4,52,50,814 TOTAL INCOME 1,82,76,261 10. THE TOTAL INCOME OF THE ASSESSEE IN THE STATUS OF COMPANY FOR ASSESSMENT YEAR 2009-10 RELEVANT TO PRE VIOUS YEAR 2008-09 IS ASSESSED AT RS. 1,82,76,261/ U/S 143(3) R.W.S. 153C OF THE I.T. ACT , 1961. THE FORM ITNS 150 SHOWING CALC ULATION OF TAX AND INTEREST CHARGEABLE, IF ANY, IS ATTACHED HEREWI TH AND FORMS A PART OF THIS ORDER. A NOTICE OF DEMAND U/S 156 OF T HE ACT AND CHALLAN FOR PAYMENT OF TAX, IF PAYABLE, IS HEREBY I SSUED. 2.1 AGGRIEVED ASSESSEE PREFERRED FIRST APPEAL WHERE THE ASSESSMENT ORDER WAS CHALLENGED ON THE GROUNDS OF VALIDITY OF NOTICE U/S 153C, SATISFACTION NOTE AND JURISDICTION FOR INITIATION O F 153C PROCEEDINGS ALONG WITH GROUNDS ON MERITS ABOUT TAXABILITY OF RECEIPTS . LD. CIT(A) REJECTED ASSESSEES GROUNDS ABOUT SATISFACTION U/S 153C AND UPHELD THE ORDER OF LD. AO IN THIS BEHALF. QUA MERITS HOWEVER IT WAS HELD T HAT PROVISIONS OF SEC ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 9 28(VA) ARE APPLICABLE AND NOT SEC 28(II)C AS APPLIE D BY AO. CONSEQUENTLY THE PART OF COMPENSATION INDICATED BY AO WAS RECEIV ED BY ASSESSEE WAS HELD TAXABLE U/S 28(VA) I.E. RECEIVING FOR NOT CARR YING OUT OF ITS BUSINESS AGAINST COCA COLA/ ATLANTIC. THUS ON MERITS ALSO LD CIT(A) UPHELD THE AOS ORDER THOUGH APPLYING A DIFFERENT CLAUSE OF SE C. 28 AND DISMISSED ASSESSEES APPEAL BY FOLLOWING OBSERVATIONS: KEEPING IN VIEW OF SUCH FACTS THE AO CAME TO THE CONCLUSION THAT THE REMAINING AMOUNT RECEIVED BY TH E APPELLANT AMOUNTING TO RS. 8.16 CRORES WAS ESSENTIALLY RECEIV ED ON ACCOUNT OF DAMAGES OCCURRED TO THE APPELLANT COMPANY DUE TO BREACH OF TERMS OF CONDITIONS OF BOTTLING AGREEMENT. ON THE O THER HAND, THE APPELLANT HAS CONTENDED THAT THE WHOLE RECEIPT OF R S. 18.33 CRORES INCLUDING RS. 8.16 CRORES ARE ESSENTIALLY ON ACCOUN T OF PREMATURE TERMINATION OF THE BUSINESS OF THE ASSESSEE AS COMP ENSATION AND THAT EVEN IF THE RECEIPTS ARE TREATED AS REVENUE TO BE TAXED AS BUSINESS INCOME THEY ARE COVERED BY THE FIRST PROVI SO TO SECTION 28(VA) ACCORDING TO WHICH EVEN REVENUE RECEIPT ARE NOT TAXABLE. IT MAY BE NOTED THAT THE PROVISIONS OF SECTION 28(V A) HAVE BEEN INSERTED W.E.F. 1-04-2003 AND THE SAME READS A S UNDER:- (VA) ANY SUM, WHETHER RECEIVED OR RECEIVABLE, IN CASH OR KIND, UNDER AN AGREEMENT FOR (A) NO CARRYING OUT ANY ACTIVITY IN RELATION AT ANY BUSINESS; OR (B) NOT SHARING ANY KNOW-HOW, PATENT, COPY RIGHT, TRADE MARK, LICENSE, FRANCHISE OR ANY OTHER BUSINESS OR COMMERCIAL RIGHT OF SIMILAR NATURE OR INFORMATION O R TECHNIQUE LIKELY TO ASSIST IN THE MANUFACTURE OR PROCESSING OF GOODS OR PROVISION FOR SERVICES:- PROVIDED THAT SUB-CLAUSE (A) SHALL NOT APPLY TO ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 10 (I) ANY SUM, WHETHER RECEIVED OR RECEIVABLE, IN CAS H OR KIND ON ACCOUNT OF TRANSFER OF THE RIGHT TO MANUFACTURE, PRODUCE OR PROCESS ANY ARTICLE OR THIN G OR RIGHT TO CARRY ON ANY BUSINESS, WHICH IS CHARGEA BLE UNDER THE HEAD CAPITAL GAIN. (II) ANY SUM RECEIVED AS COMPENSATION FROM THE MULTILATERAL FUND OF THE MONTREAL PROTOCOL ON SUBSTANCES THAT DEPLETE THE OZONE LAYER UNDER THE UNITED NATIONS ENVIRONMENT PROGRAMME, IN ACCORDANCE WITH THE TERMS OF AGREEMENT ENTERED INTO WITH THE GOVT. OF INDIA. IT MAY BE MENTIONED THAT SUCH PROVISIONS ESSENTIALL Y LAID DOWN THAT ANY SUCH RECEIPT/ INCOME DUE TO WHICH BUS INESS IS STOPPED OR BUSINESS IS NOT TO BE CARRIED OUT IS TO BE TAXED. IN FACT THE PROVISIONS OF THIS SECTION ONLY PROVIDES EXEMPT ION IN RESPECT OF THOSE INCOME WHICH WILL BE CHARGEABLE UNDER THE PR OVISIONS OF CAPITAL GAIN. IT APPEARS THAT THE OBJECTION AND INT ENTION OF THE STATUTE IS VERY CLEAR THAT WHEREAS RECEIPTS ON ACCO UNT OF TRANSFER OR SURRENDER OF RIGHTS OF MANUFACTURING / PRODUCTIO N AND WHEN SUCH RECEIPTS ARE COMPOSITE NATURE I.E. SOME CONSID ERATION IS ATTRIBUTABLE TO THE FIXED ASSET WHICH ARE TAXABLE U NDER THE PROVISIONS OF CAPITAL GAIN AND THE CONSIDERATION/ R ECEIPTS WHICH ARE NOT SPECIFICALLY COVERED UNDER THE CAPITAL GAIN ARE TO BE TAXED AND COVERED UNDER PROVISIONS OF SECTION 28(VA) PROV ISO (A) OF I.T. ACT. IT MAY BE NOTED THAT THE APPELLANT WAS HAVING RIGHT TO MANUFACTURE PRODUCTION AND SELL SOME SPECIFIC CADBU RY PRODUCTS AND BY WAY OF SUCH TWO AGREEMENTS THE APPELLANT REC EIVED TOTAL AMOUNT OF RS. 18,33,11,020/-. ONE SETTLEMENT AGREEM ENT WAS IN RESPECT OF FIXED ASSETS INCLUDED IMMOVABLE PROPERT Y AND VIDE THIS AGREEMENT DATED 24-11-2008 ALL THE FIXED ASSETS WER E TAKEN OVER BY COCACOLA INDIA (P) LTD. IN LIEU OF WHICH THE APPELL ANT RECEIVED AN AMOUNT OF RS. 10,17,88,980/- (59457864+42331296). S UCH CONSIDERATION RECEIVED BY THE APPELLANT WAS TAXABLE UNDER THE PROVISIONS OF CAPITAL GAIN AND THE APPELLANT WAS HI MSELF SHOWN CAPITAL GAIN LIABILITY ON SUCH RECEIPT. BUT THE REM AINING AMOUNT OF SETTLEMENT AGREEMENT AMOUNTING TO RS. 8,16,22,040/- IS ALSO CLAIMED TO BE A CAPITAL RECEIPT AND ACCORDINGLY NOT OFFERED FOR TAXATION. IT MAY BE NOTED THAT BY SUCH SETTLEMENT D ATED 24-11-2008 THE APPELLANT RECEIVED TOTAL CONSIDERATION OF RS. 1 8.33 CRORES AND ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 11 WITH SUCH AGREEMENT THE APPELLANT SURRENDERED ALL H IS RIGHTS OF CARRYING OUT ANY BUSINESS MANUFACTURING / PRODUCTIO N AND SALE OF CADBURY ITEMS IN RAJASTHAN STATE. THE APPELLANTS C ASE IS THAT BY SUCH AGREEMENT THE INCOME GENERATING SOURCE OF THE APPELLANT ITSELF HAS DRAINED OUT/ FINISHED THAT THEREFORE, SU CH RECEIPT IS OF CAPITAL NATURE. HOWEVER, AS STATED ABOVE INSERTING PROVISIONS OF SECTION 28(VA) BY FINANCE ACT, 2002 W.E.F. 1-04-200 3, THE PROVISIONS PROVIDE FOR TAXATION OF SUCH RECEIPTS EV EN IF THE SAME IS OF CAPITAL NATURE. THE PROVISIONS OF THE ACT IN TER MS OF SECTION 28(VA) PROVISO (A) ARE VERY CLEAR WHICH PROVIDES TH AT ONLY EXCEPTION WILL BE INCOME CHARGEABLE TO CAPITAL GAIN AND AS THE CONSIDERATION RECEIVED ON ACCOUNT OF TERMINATION O F EARLIER AGREEMENT AND SURRENDER OF RIGHTS OF MANUFACTURING PRODUCTION SALE AS ALSO CARRYING OUT THE SAME BUSINESS IN FUTU RE WAS NOT CHARGEABLE TO CAPITAL GAIN AND THEREFORE, IT WAS DE FINITELY COVERED UNDER SUCH PROVISIONS. IT MAY BE MENTIONED THAT THE INTENTION OF THE LEGIS LATURE IS PRIMARILY TO BE GATHERED FROM THE WORDS USED IN STA TUTE. IT IS THE CARDINAL RULE OF INTERPRETATION THAT WHERE THE LANG UAGE USED BY THE LEGISLATURE OF THE WORDS SHOULD BE SUPPLIED TO THE LANGUAGE USED; AND RESORT TO ANY RULE OF INTERPRETATION TO UNFOLD THE INTENTION IS PERMISSIBLE ONLY WHERE THE LANGUAGE IS AMBIGUOUS. T HERE IS NO SCOPE FOR IMPORTING INTO THE STATUTE WORDS WHICH AR E NOT THERE, EVEN IF, THERE IS A CAUSES OMISSUS; THE DEFECT CAN BE REMOVED ONLY BY LEGISLATION AND NOT BY LIBERAL INTERPRETATION. T HERE ARE NUMBER DECISIONS OF DECISIONS OF THE HON'BLE APEX COURT AS ALSO OF OTHER COURTS, SOME OF WHICH ARE ENUMERATED TO SUPPORT TH IS PROPOSITION AT PAGES 39 TO 41 OF LD. LD. CIT(A)S ORDER. 2.2 FURTHER LD. CIT(A) RELIED ON VARIOUS JUDGMENTS WHICH ARE MENTIONED IN SUBSEQUENT PARAS. IN CONCLUSION LD. CI T(A) UPHELD THE ADDITION HOLDING THE PART OF COMPENSATION TO BE TAX ABLE BUSINESS RECEIPT U/S 28(VA) OF THE ACT BY FOLLOWING OBSERVATIONS:- ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 12 IT MAY BE NOTED THAT THESE CASE LAWS ARE EITHER P ERTAINING TO THE PERIOD BEFORE 01-04-2003 OR IN CONTEXT OF AS TO WHAT SHOULD CONSTITUTE CAPITAL RECEIPT OR REVENUE RECEIPT. THE IMPORTANT ISSUE TO BE TAKEN INTO CONSIDERATION IS THAT WITH SUCH AMEND MENT AND BRINGING INTO STATUTE PROVISIONS OF SECTION 28(VA), SUCH RECEIPTS/ CONSIDERATION RECEIVED ON TRANSFER/ SURRENDER OF RI GHTS OF MANUFACTURING OF CARRYING OUT OF BUSINESS IN ANY MA NNER HAVE SPECIFICALLY BEEN BROUGHT UNDER THE PURVIEW OF TAXA TION. THEREFORE, THE RATIOS OF SUCH CASE LAWS CANNOT BE SAID TO BE A PPLICABLE TO THE FACTS OF THE APPELLANTS CASE. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES DISCUSS ED ABOVE, IT CAN BE SAID THAT THE AMOUNT OF RS. 8,16,2 2,040/- WAS RIGHTLY TAXED BY THE AO. THE ADDITION MADE BY THE A O IS ACCORDINGLY CONFIRMED. 2.3 AGGRIEVED ASSESSEE IS BEFORE US. LD. COUNSEL FO R THE ASSESSEE SHRI AJAY WADHWA ADVERTING TO THE GROUNDS ABOUT VALIDITY OF 153C PROCEEDINGS; VEHEMENTLY CONTENDS THAT THE NOTICE IS SUED ON THE ASSESSEE U/S 153C IS INVALID, AGAINST THE LAW AND THE DOCUME NTS SEIZED FROM THE CABANA GROUP DO NOT FALL WITHIN THE SCOPE OF THE TE RM BELONGS OR BELONG TO THE ASSESSEE. FOLLOWING CONTENTIONS ARE RAISED I N THIS BEHALF. THE EXISTENCE OF BUSINESS RELATIONS BETWEEN CABANA AND ASSESSEE HAVE NOT BEEN DENIED BY ANY PARTY. DURING THE COURSE OF SUCH BIPARTITE BUSINESS RELATIONSHIP SEVERAL DOCUMENTS ARE MUTUALLY EXCHANG ED, EACH PARTY RETAINS ITS PART OF DOCUMENTS AS ITS BELONGING AND SUCH DOCUMENTS WILL INVARIABLY BEAR THE NAMES OF BOTH PARTIES. THE NATU RE OF DOCUMENTS SEIZED FROM CABANA GROUP IS AS UNDER: ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 13 I. PHOTOCOPIES OF CUMULATIVE REDEEMABLE PREFERENCE SHARES PURCHASED BY PEPSICO INDIA HOLDINGS PRIVATE LIMITED FROM M/S. TRIPTY DRINKS LIMITED AND M/S. SMV BEVERAGES LIMITE D. II. SOME UNSIGNED ORIGINAL LEAVES IN THE CHEQUE BOO KS WHICH BELONGED TO THE JAIPURIA GROUP OF COMPANIES, WRITTE N IN FAVOUR OF PEPSICO INDIA HOLDINGS PRIVATE LIMITED. III. A PHOTOCOPY OF A SUPPLY AND LOAN AGREEMENT MAD E ON 01.10.2010 BETWEEN PEARL DRINKS LIMITED AND PEPSICO INDIA HOLDINGS PRIVATE LIMITED. THE FACT REMAINS THAT IMPUGNED PAPERS WERE FOUND IN THE CUSTODY OF CABANA GROUP AND HAVE NOT BEEN DENIED BY THEM AS NO T BELONGING TO THEM. IN THIS EVENTUALITY THEY CANNOT BE HELD TO BE BELONGING TO ASSESSEE IN TERMS OF SEC.153C MERELY BECAUSE ITS NAME IS MEN TIONED THEREIN. THE MEANING AND SCOPE OF WORDS BELONG OR BELONGS TO M ENTIONED IN SEC. 153C HAS BEEN A SUBJECT MATTER OF INTENSE JUDICIAL DEBATE AND THERE EXISTS A PLETHORA OF CASE LAW IN THIS BEHALF. THE DOCUMENT S IN QUESTION DO NOT FIT IN THE MEANING AND SCOPE OF BELONGING TO AS HELD BY VARIOUS JUDICIAL PRECEDENTS IN TERMS OF SEC 153C. IT IS VEHEMENTLY ARGUED THAT THE PHOTOCOPIES OF THE PREFERENCE SHARES DO NOT BELONG TO THE ASSESSEE AND THESE PHOTOCOPIES BELONGED TO THE CABANA GROUP. ASS ESSEE BEING OWNER OF SHARES THEIR ORIGINAL CERTIFICATES ARE WITH THE ASSESSEE, THE COPIES WERE PROPERTY OF AND BELONGED TO CABANA GROUP. ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 14 2.4 APROPOS UNSIGNED CHEQUES IT WAS CONTENDED THAT THEY WERE FOUND IN THE CHEQUE BOOKS OF THE CABANA GROUP COMPANIES O NLY AND NOT EVEN HANDED OVER TO THE ASSESSEE. BEFORE THE PHYSICAL DE LIVERY THEREOF TO ASSESSEE THEY REMAINED THE PROPERTY OF CABAN GROUP. ITS BEYOND COMPREHENSION THAT HOW A CHEQUE WHICH IS NOT EVEN H ANDED OVER TO ASSESSEE CAN BE HELD TO BE BELONGING TO IT. BESIDES HOW A CHEQUE WHICH IS ROUTED ONLY THROUGH BANK CAN LEAD TO A BELIEF THAT IT REPRESENTS UNDISCLOSED INCOME OF THE ASSESSEE QUA THE PHOTOCOP Y OF THE SUPPLY AND LOAN AGREEMENT ASSESSEE POINTED OUT THAT BEING FOUN D IN THE POSSESSION OF THE CABAN GROUP BELONGED TO THEIR ENTITY. THE OR IGINAL THEREOF WHICH BELONGED TO ASSESSEE WAS IN ITS POSSESSION. THE PH OTOCOPY BELONGED TO JAIPURIA GROUP AS A PARTY TO THE AGREEMENT CANNOT B E HELD AS BELONGING TO ASSESSEE. THEREFORE, IT WAS OBJECTED BY THE ASSESSE E THAT NONE OF THE DOCUMENTS FOUND DURING THE COURSE OF SEARCHES CONDU CTED ON THE CABANA GROUP WHICH FIND MENTION IN THE SATISFACTION NOTE D ATED 29.07.2013, COULD BE SAID TO BE BELONGED TO THE ASSESSEE. CONSE QUENTLY, THE PROCEEDINGS UNDER SECTION 153C OF THE SAID ACT OUGH T TO BE DROPPED AS NONE OF THE CONDITIONS MANDATORY FOR INITIATION OF THESE PROVISIONS WAS SATISFIED. FOLLOWING CONTENTIONS ARE MADE IN THIS BEHALF. PROVISIONS OF THE ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 15 ACT RELATING TO THE WORDS BELONG OR BELONGS TO IN SECTIONS 153C, 132(4) AND 292C OF THE ACT ARE AS UNDER; 1.1 SECTION 153C OF THE ACT, ASSESSMENT OF INCOME O F ANY OTHER PERSON. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139 , SECTION 147 , SECTION 148 , SECTION 149 , SECTION 151 AND SECTION 153 , WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULL ION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DO CUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER T HAN THE PERSON REFERRED TO IN SECTION 153A , THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON 3A [AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSO N AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF THE OTHER PERSON I N ACCORDANCE WITH THE PROVISIONS OF SECTION 153A . 1.2 SECTION 132 OF THE ACT, SEARCH AND SEIZURE (1) (4A) WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, M ONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE O F A SEARCH, IT MAY BE PRESUMED (I) THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MO NEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BELONG OR BELONG S TO SUCH PERSON; (II) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS ARE TRUE ; AND (III) THAT THE SIGNATURE AND EVERY OTHER PART OF SU CH BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN THE HANDWRIT ING OF ANY PARTICULAR PERSON OR WHICH MAY REASONABLY BE ASSUMED TO HAVE B EEN SIGNED BY, OR TO BE IN THE HANDWRITING OF, ANY PARTICULAR PERSON, ARE IN THAT PERSONS HANDWRITING, AND IN THE CASE OF A DOCUMENT STAMPED, EXECUTED OR ATTESTED, THAT IT WAS DULY STAMPED AND EXECUTED OR ATTESTED B Y THE PERSON BY WHOM IT PURPORTS TO HAVE BEEN SO EXECUTED OR ATTESTED. ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 16 1.3 SECTION 292C OF THE ACT, PRESUMPTION AS TO ASSE TS, BOOKS OF ACCOUNT, ETC. (1) WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, M ONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE O F A SEARCH UNDER SECTION 1321[OR SURVEY UNDER SECTION 133A], IT MAY, IN ANY PROCEEDING UNDER THIS ACT, BE PRESUMED (I) THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MO NEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BELONG OR BELONG S TO SUCH PERSON; (II) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS ARE TRUE; AND (III) THAT THE SIGNATURE AND EVERY OTHER PART OF SU CH BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN THE HANDWRIT ING OF ANY PARTICULAR PERSON OR WHICH MAY REASONABLY BE ASSUMED TO HAVE B EEN SIGNED BY, OR TO BE IN THE HANDWRITING OF, ANY PARTICULAR PERSON, ARE IN THAT PERSONS HANDWRITING, AND IN THE CASE OF A DOCUMENT STAMPED, EXECUTED OR ATTESTED, THAT IT WAS DULY STAMPED AND EXECUTED OR ATTESTED B Y THE PERSON BY WHOM IT PURPORTS TO HAVE BEEN SO EXECUTED OR ATTESTED . A PLAIN READING OF ALL THESE PROVISIONS POSTULATES THAT:- 1. SECTION 153C OF THE ACT, PRESCRIBES A MANDATORY CON DITION THAT A SATISFACTION OF THE AO THAT THE DOCUMENTS SEIZED BE LONG OR BELONGS TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SEC. 153A IS TO BE RECORDED. IT PRESUPPOSES DETERMINATION OF QUESTION WHETHER THE DOCUMENT BELONGS TO OTHER ASSESSEE OR NOT IN THE LI GHT OF OTHER RELEVANT PROVISIONS AS MENTIONED ABOVE. 2. RELIANCE IS PLACED ON FOLLOWING JUDGMENTS WHICH HAV E FURTHER LAID DOWN JUDICIAL PARAMETERS AS TO HOW THE SATISFACTION HAS TO BE RECORDED AND THE MEANING OF THE PHRASE BELONGS TO ARE IN T HE CASE OF : ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 17 PEPSI FOODS PVT. LTD. V. ASSISTANT COMMISSIONER OF INCOME TAX, [2014] 52 TAXMANN.COM 220 (DELHI) DTD.-7 AUGUS T 2014 PEPSICO INDIA HOLDINGS PVT. LTD. V. ASSISTANT COMMI SSIONER OF INCOME-TAX, [2014] 367 ITR 673 (DELHI) DTD. 14 AUGUST 2014 SINCE THESE ARE THE ONLY HIGH COURT JUDGMENTS AVAIL ABLE ON THE MEANING OF THESE TERMS, THEIR RATIO IS PLEADED TO BE BINDI NG ON THE TRIBUNAL AS HELD BY COMMISSIONER OF INCOME-TAX V.SMT.GODAVARIDEVI SA RAF [1978] 113 ITR 589 (BOM.) AND TAYLOR INSTRUMENT CO. (INDIA) L TD. V. COMMISSIONER OF INCOME-TAX, [1998] 99 TAXMAN 155 (DELHI). 3. HONBLE DELHI HIGH COURT IN THE CASE OF PEPSI FOODS PVT. LTD. (SUPRA) ON THE RELEVANT ASPECT HELD AS UNDER: 6. ON A PLAIN READING OF SECTION 153C, IT IS EVIDE NT THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON MUST BE 'S ATISFIED' THAT INTER ALIA ANY DOCUMENT SEIZED OR REQUISITIONED 'BE LONGS TO' A PERSON OTHER THAN THE SEARCHED PERSON. IT IS ONLY T HEN THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON CAN HANDOV ER SUCH DOCUMENT TO THE ASSESSING OFFICER HAVING JURISDICTI ON OVER SUCH OTHER PERSON (OTHER THAN THE SEARCHED PERSON). FURT HERMORE, IT IS ONLY AFTER SUCH HANDING OVER THAT THE ASSESSING OFF ICER OF SUCH OTHER PERSON CAN ISSUE A NOTICE TO THAT PERSON AND ASSESS OR RE- ASSESS HIS INCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. THEREFORE, BEFORE A NOTICE UNDER SECTION 153C CAN BE ISSUED TWO STEPS HAVE TO BE TAKEN. THE FIRST STEP IS THAT THE ASSESSING OFFICER OF THE PERSON WHO IS SEARCHED MUST ARRIVE A T A CLEAR ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 18 SATISFACTION THAT A DOCUMENT SEIZED FROM HIM DOES N OT BELONG TO HIM BUT TO SOME OTHER PERSON. THE SECOND STEP IS - AFTER SUCH SATISFACTION IS ARRIVED AT - THAT THE DOCUMENT IS H ANDED OVER TO THE ASSESSING OFFICER OF THE PERSON TO WHOM THE SAID DO CUMENT 'BELONGS'. IN THE PRESENT CASES IT HAS BEEN URGED O N BEHALF OF THE PETITIONER THAT THE FIRST STEP ITSELF HAS NOT BEEN FULFILLED. FOR THIS PURPOSE IT WOULD BE NECESSARY TO EXAMINE THE PROVIS IONS OF PRESUMPTIONS AS INDICATED ABOVE. SECTION 132(4A)(I) CLEARLY STIPULATES THAT WHEN INTER ALIA ANY DOCUMENT IS FOU ND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE O F A SEARCH IT MAY BE PRESUMED THAT SUCH DOCUMENT BELONGS TO SUCH PERS ON. IT IS SIMILARLY PROVIDED IN SECTION 292C(1)(I). IN OTHER WORDS, WHENEVER A DOCUMENT IS FOUND FROM A PERSON WHO IS BEING SEAR CHED THE NORMAL PRESUMPTION IS THAT THE SAID DOCUMENT BELONG S TO THAT PERSON. IT IS FOR THE ASSESSING OFFICER TO REBUT TH AT PRESUMPTION AND COME TO A CONCLUSION OR 'SATISFACTION' THAT THE DOC UMENT IN FACT BELONGS TO SOMEBODY ELSE. THERE MUST BE SOME COGENT MATERIAL AVAILABLE WITH THE ASSESSING OFFICER BEFORE HE/SHE ARRIVES AT THE SATISFACTION THAT THE SEIZED DOCUMENT DOES NOT BELO NG TO THE SEARCHED PERSON BUT TO SOMEBODY ELSE. SURMISE AND C ONJECTURE CANNOT TAKE THE PLACE OF 'SATISFACTION'. THUS THE HONBLE DELHI HIGH COURT LAYS DOWN FOLLOWI NG FOUR REQUIREMENTS IN THIS BEHALF: (A) THAT THE ASSESSING OFFICER OF THE SEARCHED PERS ON MUST BE SATISFIED THAT THE SEIZED DOCUMENTS BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON. (B) THE AO HAS TO REBUT THE PRESUMPTION U/S 132(4A) AND SEC. 292C AND COME TO THE CONCLUSION OR SATISFACTION THAT THE DOCUMENTS IN FACT BELONG TO SOME OTHER ASSESSEE. (C) THERE MUST BE COGENT MATERIAL AVAILABLE WITH TH E AO BEFORE HE ARRIVES AT A SATISFACTION THAT THE SEIZED DOCUMENTS DO NOT BELONG TO THE SEARCHED PERSON BUT SOME OTHER ASSESSEE. ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 19 (D) SURMISE AND CONJECTURE CANNOT TAKE THE PLACE OF SATISFACTION. HONBLE DELHI HIGH COURT IN THE CASE OF PEPSICO HEL D THAT THE SATISFACTION RECORDED U/S 153C WAS INVALID AND QUAS HED THE PROCEEDINGS BY HOLDING THAT: 11. IT IS EVIDENT FROM THE ABOVE SATISFACTION NOTE THAT APART FROM SAYING THAT THE DOCUMENTS BELONGED TO THE PETI TIONER AND THAT THE ASSESSING OFFICER IS SATISFIED THAT IT IS A FIT CASE FOR ISSUANCE OF A NOTICE UNDER SECTION 153C, THERE IS NOTHING WHICH WOULD INDICATE AS TO HOW THE PRESUMPTIONS WHICH ARE TO BE NORMALLY RAISED AS INDICATED ABOVE, HAVE BEEN REBUTTED BY THE ASSESSIN G OFFICER. MERE USE OR MENTION OF THE WORD 'SATISFACTION' OR THE WO RDS 'I AM SATISFIED' IN THE ORDER OR THE NOTE WOULD NOT MEET THE REQUIREMENT OF THE CONCEPT OF SATISFACTION AS USED IN SECTION 1 53C OF THE SAID ACT. THE SATISFACTION NOTE ITSELF MUST DISPLAY THE REASONS OR BASIS FOR THE CONCLUSION THAT THE ASSESSING OFFICER OF TH E SEARCHED PERSON IS SATISFIED THAT THE SEIZED DOCUMENTS BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON. WE ARE AFRAID, THAT GOING THRO UGH THE CONTENTS OF THE SATISFACTION NOTE, WE ARE UNABLE TO DISCERN ANY 'SATISFACTION' OF THE KIND REQUIRED UNDER SECTION 1 53C OF THE SAID ACT. THUS FOLLOWING HONBLE DELHI HIGH COURT IT BECOMES OBVIOUS THAT MERE USE OF WORDS SATISFACTION OR I AM SATISFIED WOU LD NOT MEET THE REQUIREMENTS OF THE SATISFACTION IN TERMS OF SEC 15 3C. THE SATISFACTION NOTE MUST OBJECTIVELY DEMONSTRATE THE REASONS OR BA SIS FOR ARRIVING AT THE OBJECTIVE SATISFACTION OF AO OF THE SEARCHED PERSON THAT THE SEIZED DOCUMENTS BELONG TO A PERSON OTHER THAN THE SEARCHE D PERSON. THIS SATISFACTION CANNOT BE ARRIVED AT IN SUBJECTIVE TER MS. IN THE INSTANT CASE THREE TYPES OF DOCUMENTS ARE MENTIONED IN SATISFACT ION NOTE. ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 20 I. PHOTOCOPIES OF CUMULATIVE REDEEMABLE PREFERENCE SHA RES PURCHASED BY PEPSICO INDIA HOLDINGS PRIVATE LIMITED FROM M/S. TRIPTY DRINKS LIMITED AND M/S. SMV BEVERAGES L IMITED. II. CHEQUES FOUND IN THE CHEQUE BOOKS OF THE CABANA/JAI PURIA GROUP COMPANIES. THESE UNSIGNED CHEQUE LEAVES ARE FOUND I N THE CHEQUE BOOKS LYING WITH CABAN/JAIPURIA GROUP. III. A PHOTOCOPY OF A SUPPLY AND LOAN AGREEMENT MADE ON 01.10.2010 BETWEEN PEARL DRINKS LIMITED AND PEPSICO INDIA HOLDINGS PRIVATE LIMITED. 2.5 THE PERSON SEARCHED I.E. CABAN/JAIPURIA GROUP H AS NOT DISPUTED THAT THESE DOCUMENTS BELONGING TO THEM. A DOCUMENT CAN BELONG TO ONE PERSON IF IT IS DENIED THAN THE QUESTION OF BELONGI NG TO SOME OTHER PERSON ARISES; IN THIS EXIGENCY THE PROVISIONS OF SECTION 153C OF THE SAID ACT DO NOT GET ATTRACTED AS CABANA HAS NOT DENIED THE BELO NGING IN TERMS OF SEC 132 OR 158A/C. THUS THE SCHEME OF PROVISIONS PRESUP POSE THAT ASSESSING OFFICER OF THE SEARCHED PERSON MUST FIRST RECORD A SATISFACTION THAT THE ALLEGED SEIZED DOCUMENTS DO NOT BELONG TO THE SEARC HED PERSON; THEN ONLY THE QUESTION OF SATISFACTION OF BELONGING TO OTHER PERSON ARISE. IT IS A CURIOUS SITUATION WHERE THE SEARCHED PERSON IS NOT DENYING THE BELONGING OF DOCUMENT NEVERTHELESS LD. AO RECORDS A SATISFACT ION THAT THEY BELONG TO ASSESSEE IN QUESTION. MERE FINDING OF PHOTOCOPIES I N THE POSSESSION OF A SEARCHED PERSON DOES NOT NECESSARILY MEAN AND IMPLY THAT THEY 'BELONG' ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 21 TO THE PERSON WHO IS OWNER OF THE ORIGINALS. OWNERS HIP OF DOCUMENTS AND POSSESSION OF PHOTOCOPIES OF DOCUMENTS ARE TWO ALTO GETHER SEPARATE CONNOTATIONS. SEIZED PHOTOCOPIES LAWFULLY BELONGED TO CABANA GROUP WHICH THEY NEVER DISCLAIMED. SATISFACTION NOTE ITSE LF MUST DISPLAY REASONS OR BASIS OF CONCLUSION THAT THE DOCUMENTS BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON. IT IS ALSO SETTLED LAW THAT T HE SATISFACTION NOTE HAS TO BE READ AS IT IS WITHOUT ANY ADDITION, SUBTRACTION OR WITH THE HELP OF ALLIED DOCUMENTS. IT CANNOT BE SUPPLEMENTED OR SUPPLANTED . RELIANCE IS PLACED ON: [EAST COAST COMMERCIAL COMPANY 128 ITR 326 (CAL), E QUITABLE INVESTMENT 174 ITR 714 (CAL) PEPSI FOODS PVT. LTD.(SUPRA) PEPSICO INDIA HOLDINGS PVT. LTD.(SUPRA)] 2.6 IN THE LIGHT OF THESE CONTENTIONS, IT IS PLEADE D THAT NONE OF THE PURPORTED SEIZED DOCUMENTS, CAN BE SAID TO BELONG TO THE ASSESSEE; THUS THE BASIC INGREDIENTS OF SECTION 153C OF THE ACT HA VE NOT BEEN SATISFIED IN THE INSTANT CASE. CONSEQUENTLY, THE NOTICES ISSUED UNDER SECTION 153C OF THE ACT AND IN PURSUANCE THERETO, THE ASSESSMENT OR DERS PASSED UNDER SECTION 143(3) READ WITH SECTION 153C OF THE ACT, D ESERVE TO BE QUASHED. ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 22 2.7 APROPOS MERITS IT IS CONTENDED THAT LD. AO ERRE D IN APPLYING SECTION 28(II)(C) FOR UPHOLDING THE ADDITION OF RS. 8,16,22,040/- AS REVENUE RECEIPT & LD. CIT(A) FURTHER ERRED IN CHANGING THE CHARGING SECTION AND WRONGLY APPLYING SECTION 28(VA) OF THE ACT. 2.8 ADVERTING TO AOS ORDER, IT IS CONTENDED THAT A PLAIN READING OF SEC. 28(II)(C) MAKE IT SPECIFICALLY APPLICABLE ONLY TO H OLDER OF AN AGENCY IN INDIA. NONE OF THE ORIGINAL AGREEMENT OR LITIGATION DOCUMENTS CLAIM THAT ASSESSEE WAS HOLDING ANY AGENCY WHATSOEVER. THE ASS ESSEE ONLY HELD RIGHTS FOR MANUFACTURING/FILLING/SELLING AND DISTRI BUTING BEVERAGES UNDER FIXED TRADE MARKS FOR A PERIOD OF 50 YEARS AND NOT FOR GRANT OF ANY AGENCY. IN FIRST APPEAL LD.CIT(A) REALIZING THE WRONG APPLI CATION OF THIS CLAUSE I.E.28(II)(C) CHANGED IT TO 28(VA). REVENUE HAS ACC EPTED THIS FINDING, THUS THERE IS NO ISSUE LEFT ABOUT SEC 28(II)(C). 2.9 IT IS FURTHER CONTENDED THAT THE ENTIRE COMPOSI TE COMPENSATION IN QUESTION IS RECEIVED FOR FOREGOING THE RIGHT TO SUE AND WITHDRAWING THE VARIOUS COURT CASES FILED AGAINST ATLANTIC INDUSTRI ES, IRELAND. LD. CIT(A) HAS AT PAGE 39 HAS WRONGLY MENTIONED THAT ASSESSEE RECEIVED TOTAL CONSIDERATION OF RS. 18.33 CRORES WITH SUCH CONDITI ON THAT ASSESSEE AGREES TO SURRENDER ALL THE RIGHTS OF CARRYING ON BUSINESS , MANUFACTURING AND PRODUCTION. NEITHER ANY CLAUSE OF SETTLEMENT AGREEM ENT SUPPORTS THIS ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 23 FINDING NOR THE ASSESSEE HAS ACCEPTED SO. HAD IT BEEN SO LD. AO WOULD NOT HAVE APPLIED 28(II) C; BESIDES LD. CIT(A) HAS HIMSE LF ACCEPTED THE BIFURCATION. THIS OBSERVATION BEING THE EDIFICE OF LD. CIT(A)S ORDER FOR CHANGING THE CHARGING SECTION AND UPHOLDING THE ADD ITION, HAS NO LEGS TO STAND AND IS NOT BORNE OUT BY THE RECORD. IT IS VEHEMENTLY CONTENDED THAT THE PROVISIONS OF SECTION 28(VA) ARE ALSO NOT APPL ICABLE TO THE FACTS OF THE INSTANT CASE INASMUCH AS THE COMPENSATION RECEIVED BY THE ASSESSEE WAS IN LIEU OF WITHDRAWING THE RIGHT TO SUE AGAINST ATL ANTIC/COCA COLA, WHICH IS OUTSIDE THE PURVIEW OF TAXATION IN TERMS OF SECT ION 28(VA) AS BUSINESS RECEIPTS. THE LIST OF PENDING LITIGATION IS MENTION ED IN THE ORDERS, THE COMPENSATION IS RECEIVED SOLELY FOR WITHDRAWING THI S MULTIFARIOUS LITIGATION AND IS PURELY A CAPITAL RECEIPT WHICH IS NOT CHARGEABLE TO TAX U/S 28(VA). NONE OF THE CLAUSES OF SETTLEMENT AGREE MENT IS ATTRIBUTABLE TO ANY NON COMPETE AGREEMENT OR FOR NOT CARRYING OUT A NY ACTIVITY IN RELATION TO ANY BUSINESS AS HELD BY AUTHORITIES BELOW. THIS ASPECT HAS BEEN WRONGLY INFERRED BY LD. CIT(A) WITHOUT QUOTING ANY SPECIFIC CLAUSE OF COMPENSATION AGREEMENT. IT IS CONTENDED THAT THE CASES WITH MRTP WERE FILED TO BRING HOME THE POINT THAT COCA COLA WAS MO NOPOLISTIC IN ITS APPROACH AND WAS KILLING COMPETITION WHICH WAS IN V IOLATION OF RELEVANT INDIAN LAWS. SIMILARLY ARBITRATION SUITS WERE INSTI TUTED AS PER THE ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 24 AGREEMENTS AND INDIAN ARBITRATION ACT. LD. COUNSEL ADVERTED TO THE FOLLOWING RELEVANT CLAUSES OF SETTLEMENT AGREEMENT WHICH IS PLACED ON THE PAPER BOOK: PG. NO. OF PB- 2 CLAUSE NO. PARTICULARS 82 C CERTAIN DISPUTES AROSE BETWEEN SATYAM AND ATLA NTIC UNDER THE BOTTLING AGREEMENT PURSUANT TO WHICH SATYAM INITIATED ARBITRATION PROCEEDINGS AND FILED AN APPL ICATION BEFORE THE HIGH COURT OF RAJASTHAN FOR THE APPOINTM ENT OF ARBITRATOR. ADDITIONALLY, SATYAM FILED A COMPLAINT BEFORE THE MONOPLOIES AND RESTRICTIVE TRADE PRACTICES COMMISSION (MRTP COMMISSION) FOR AN INQUIRY INTO ALLEGED UNFAIR TRADE PRACTICES BEING CONDUCTED BY A TLANTIC AND ITS AFFILIATES; 82 D SATYAM AND ATLANTIC AGREED UPON HEADS OF TERMS IN A LETTER AGREEMENT DATED AUGUST 25, 2008 (LETTER AGREEMENT), WITH THE INTENT TO RESOLVE THE DISPUTE S UNDER THE BOTTLING AGREEMENT OR OTHERWISE AND AMICABLY SE TTLE ALL DEMANDS, DISPUTES, DIFFERENCES, LOSSES, DAMAGES AND CLAIMS ARISING THEREUNDER AND SETTLE, FULLY AND FIN ALLY, SUCH DISPUTES, WHETHER QUANTIFIED OR NOT; AND UPON SUCH SETTLEMENT PROCURE AN AFFILIATE OF ATLANTIC TO PURC HASE CERTAIN SPECIFIED ASSETS OF SATYAM SUBJECT TO LEGAL , OPERATIONAL AND TAX DUE DILIGENCE. 82 E IN CONSIDERATION OF THE EXECUTION OF THE LETTE R AGREEMENT AND AS ADVANCE MONEY ON THE SETTLEMENT AMOUNT (DEFINED HEREINAFTER) ATLANTIC IN GOOD FAITH HAS PA ID SATYAM A SUM OF RS.5,00,00,000 (RUPEES FIVE CRORES ONLY) (ADVANCE AMOUNT) WHICH IS TO BE ADJUSTED WI TH THE SETTLEMENT AMOUNT OR REFUNDED IN ACCORDANCE WIT H THE TERMS THEREOF. ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 25 82 F SUBJECT TO THE TERMS AND CONDITIONS OF THIS AG REEMENT, SATYAM AND ATLANTIC INTER ALIA WISH TO MUTUALLY TER MINATE THE BOTTLING AGREEMENT TO WHICH THEY ARE PARTIES AN D IN CONNECTION WITH SUCH TERMINATION TO RELEASE EACH OT HER AND THEIR AFFILIATES (DEFINED HEREIN BELOW) FROM AN Y AND ALL CLAIMS AND LIABILITIES THERE UNDER. 84 2.1 IN CONSIDERATION OF RECEIPT OF THE SETTLEMEN T AMOUNT, SATYAM HEREBY AGREES TO IRREVOCABLY AND UNCONDITION ALLY RELEASE ACQUIT, WAIVE, RELINQUISH AND WITHDRAW ALL CLAIMS AND COMPLAINTS, WHETHER INITIATED OR NOT, AGAINST A TLANTIC OR ANY OF ITS AFFILIATES AND/OR ANY EMPLOYEE/DIRECT OR OF ATLANTIC OR ANY OF ITS AFFILIATES AND UNDERTAKES NO T TO INITIATE, PROCEED WITH OR PROSECUTE ANY OF CLAIMS O R THE COMPLAINTS AND FOREVER DISCHARGES ATLANTIC OR ANY O F ITS AFFILIATES AND/OR ANY EMPLOYEE/DIRECTOR OF ATLANTIC OR ANY OF ITS AFFILIATES AS MORE PARTICULARLY DETAILED BEL OW. WITH EFFECT FROM COMPLETION AND IN CONSIDERATION OF RECE IPT OF THE SETTLEMENT AMOUNT, SATYAM HEREBY AGREES, ACCEPT S, UNDERTAKES AND REPRESENTS THAT IT HAS VOLUNTARILY A GREED TO ACCEPT THE SETTLEMENT AMOUNT TOWARDS FULL AND FINAL SETTLEMENT OF ALL ITS OUTSTANDING DIFFERENCES, DISP UTES, DAMAGES, CLAIMS OR DEMANDS, WHETHER ASSERTED OR UNASSERTED, WHETHER KNOWN OR UNKNOWN, CONTINGENT OR LIQUIDATED, SUSPECTED OR UNSUSPECTED, IN LAW OR IN EQUITY, FOR OR BY REASON OF ANY MATTER, CAUSE OR THING, AGA INST ATLANTIC OR ANY OF ITS AFFILIATES ARISING UNDER OR RELATING TO THE BOTTLING AGREEMENT, TERMINATION THEREOF OR OTHE RWISE AND/OR THE LEGAL PROCEEDINGS LISTED UNDER SCHEDULE 1. 85 2.2 THE PARTIES AGREE THAT WITH EFFECT FROM COMP LETION, ALL DISPUTES RAISED BY SATYAM, WHETHER QUANTIFIED OR NO T AND WHETHER ASSERTED OR UNASSERTED, ARISING OUT OF THE BOTTLING AGREEMENT OR OTHERWISE AND/OR THE LEGAL PROCEEDINGS LISTED UNDER SCHEDULE I SHALL STAND FULLY AND FINAL LY SETTLED. 85 2.3 SATYAM HEREBY FULLY, COMPLETELY, IRREVOCABLY , FINALLY AND FOREVER RELEASES, ACQUITS AND DISCHARGES ATLANTIC, ITS AFFILIATES AND ATLANTICS SUCCESSORS AND ASSIGNS AN D ITS CURRENT, FORMER AND FUTURE OFFICERS, DIRECTORS, REPRESENTATIVES, AGENTS, EMPLOYEES AND ATTORNEYS (COLLECTIVELY, THE ATLANTIC RELEASES) WITH EFFEC T FROM ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 26 COMPLETION, FROM ANY AND ALL OR PRESENT AND FUTURE CLAIMS, CAUSES OF ACTION, RIGHTS, DEBT, LIABILITIES , PROMISES, AGREEMENTS, DEMANDS, DAMAGES, ACCOUNTINGS AND COSTS AND EXPENSES OF ANY KIND WHATSOEVER IN LAW OR IN EQ UITY, WHETHER KNOWN OR UNKNOWN, EXISTING OR CONTINGENT, ASSERTED OR UNASSERTED, APPARENT OR CONCEALED, THAT IT HAS OR MAY HAVE IN THE FUTURE AGAINST ATLANTIC OR ANY O F THE OTHER ATLANTIC RELEASES, DIRECTLY OR INDIRECTLY, AR ISING OUT OF OR RELATING TO THE BOTTLING AGREEMENT OR ANY PROCEEDINGS REFERRED TO IN SCHEDULE I OR OTHERWISE. IT IS THE INTENT OF AGREEMENT TO COMPLETELY RELEASE ALL C LAIMS AGAINST THE ATLANTIC RELEASES EVEN IF NOT SPECIFICA LLY EXCLUDED OR ACCEPTED INDIVIDUALLY OR BY CATEGORY IN THIS AGREEMENT. 85 2.4 SATYAM FURTHER AGREES AND ACKNOWLEDGES THAT ON RECEIPT OF THE SETTLEMENT AMOUNT, IT SHALL BE LEFT WITH NO OTHER OUTSTANDING CLAIMS(S), DEMAND(S), DIFFERENCE(S), DI SPUTE(S) OR LIABILITY(IES), AGAINST ATLANTIC OR ANY OF ITS A FFILIATES UNDER THE BOTTLING AGREEMENT OR OTHERWISE AND/OR TH E LEGAL PROCEEDINGS LISTED UNDER SCHEDULE I, NOR SHAL L IT RAISE ANY CLAIM(S), DEMAND(S), DIFFERENCE(S), DISPU TE(S) OR LIABILITY(IES) AGAINST ATLANTIC OR ANY OF ITS AFFIL IATES UNDER ANY OTHER COMMUNICATION OR LETTER OR UNDERSTANDING, WHETHER WRITTEN OR ORAL, REPRESENTATION, WARRANTY O R UNDERTAKING GIVEN OR FURNISHED BY ATLANTIC OR ANY O F ITS AFFILIATES, TILL THE DATE HEREOF AND/OR WITH RESPEC T TO ANY INVESTMENT MADE BY SATYAM ON THE BASIS OF ANY REPRESENTATION, WARRANTY OR UNDERTAKING, EXPRESS OR IMPLIED, MADE BY ATLANTIC OR ANY OF ITS AFFILIATES, WHETHER ORALLY OR IN WRITING AND/OR WITH RESPECT OF ANY ACC RUED OR CONTEMPLATED OBLIGATION TO A THIRD PARTY OR ENTITY ARISING IN OR IN CONNECTION WITH THE ARRANGEMENTS BETWEEN SATYAM AND ATLANTIC OR ITS AFFILIATES FOR ANY ACCRU ED OR CONTEMPLATED LOSS. 86 2.7 NO PROVISION OF THIS AGREEMENT IS, NOR SHALL ANY SUCH PROVISION IN ANY WAY BE DEEMED TO CONSTITUTE, AN ADMISSION OR EVIDENCE NEITHER BY ANY WRONG DOING OR LIABILITY ON THE PART OF ANY PARTY NOR OF ANY VIOLA TION OF ANY APPLICABLE STATUTE, RULE, REGULATION OR PRINCIP LE OF COMMON LAW OR EQUITY. THIS AGREEMENT IS BEING ENTE RED ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 27 INTO FOR THE PURPOSE OF COMPROMISING DISPUTES AND C LAIMS AND AVOIDING THE EXPENSES AND RISKS OF LITIGATION. 86 2.8 WITH EFFECT FROM COMPLETION, SATYAM AGREES T HAT IT WILL NOT AND WILL FOREVER REFRAIN AND FOREBEAR FROM COMMENCING, INSTITUTING OR PROSECUTING ANY LAWSUIT, PROCEEDING OR ACTION, OR IN ANY MANNER VOLUNTARILY AID THE COMMENCEMENT, INSTITUTION OR PROSECUTION OF ANY CLA IM, DEMAND, SUIT, PROCEEDING OR ACTION OR CAUSE OF ACTI ON, AGAINST ATLANTIC OR ANY OF ITS AFFILIATES WITH RESP ECT TO ANY MATER, CAUSE OR THING WHATSOEVER ARISING OUT OF, B ASED IN WHOLE OR IN PART UPON, RELATING TO, OR EXISTING, BY REASON OF THE TRANSACTIONS, EVENTS, OCCURRENCES, ACTS, OMI SSIONS OR FAILURES TO ACT, OF WHATEVER KIND OR CHARACTER WHAT SOEVER RELATING TO THE BOTTLING AGREEMENT AND AMENDMENTS M ADE TO THE AFORESAID AGREEMENTS, OR SET FORTH IN THE RE CITALS, ABOVE. 86 2.9 SATYAM SHALL IMMEDIATELY UPON THE EXECUTION OF THIS AGREEMENT, FILE IRREVOCABLE APPLICATIONS, OR LETTER S, AS APPROPRIATE, TO WITHDRAW ALL LEGAL PROCEEDINGS PEND ING BEFORE THE MRTP COMMISSION, THE RAJASTHAN HIGH COUR T AND THE ARBITRAL TRIBUNAL MORE SPECIFICALLY SET OUT IN SCHEDULE 1 AND SETTLE ALL CLAIM(S) RAISED THEREIN T OGETHER WITH ALL CLAIM(S) CONNECTED THERETO. 86 2.10 SATYAM IRREVOCABLY AGREES THAT IN THE EVENT THAT THE DIRECTOR GENERAL (INVESTIGATION & REGISTRATION) OF THE MRTP COMMISSION WERE TO INITIATE ANY ENQUIRY RELATA BLE TO THE SUBJECT MATTER OF ANY OF THE COMPLAINTS WITH DRAWN BY SATYAM, SATYAM SHALL FULLY COOPERATE WITH ATLANT IC AND ITS AFFILIATES AND TAKE ALL EFFORTS TO DEFEND THE I NTERESTS OF ATLANTIC AND ITS AFFILIATES AND TO TAKE EFFORTS TO ENSURE THAT NO PREJUDICIAL ORDER IS BASED AGAINST ATLANTIC OR I TS AFFILIATES IN ANY PROCEEDINGS REFERRED TO IN SCHEDU LE I OR OTHERWISE. 87 4.2 SATYAM SHALL SHOW PROOF OF IRREVOCABLY AND UNCONDITIONALLY WITHDRAWING ALL NOTICE(S), LEGAL PROCEEDINGS AND CLAIMS, AGAINST ATLANTIC OR ANY OF ITS AFFILIATES (SET OUT IN SCHEDULE I) BEFORE ANY COURT , TRIBUNAL OR FORUM IN ORDER TO PROCURE APPROPRIATE ORDERS OF DISMISSAL, DISCHARGE, DISPOSAL OR WITHDRAWAL OF SUC H LEGAL PROCEEDINGS AND CLAIMS. ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 28 87 4.3 SATYAM SHALL HAVE DELIVERED TO ATLANTIC CERT IFIED COPIES OF THE RELEVANT ORDERS OF DISCHARGE, DISMISSAL; DISPOS AL OR WITHDRAWAL OF PROCEEDINGS FROM THE RELEVANT COMMISS ION, COURT OR TRIBUNAL FOR THE LEGAL PROCEEDINGS ENLISTE D IN SCHEDULE III. IT IS CONTENDED THAT LOOKING AT THE DELINQUENT APPR OACH OF COCA COLA/ATLANTIC MANAGEMENT ASSESSEE HAD TWO POSSIBLE LEGAL REMEDIES AVAILABLE TO IT TO DEFEND ITS TITLE AND LEGAL RIGHT S: A SEEK SPECIFIC PERFORMANCE I.E. REQUEST FOR BEING PLACED AT THE SAME POSITION AS HE WAS IN 1998. THE REMEDY WAS NOT AVAILABLE IN AS MUCH AS MUCH WATER HAD FLOWN. ITS T ERRITORY HAD BEEN TAKEN AWAY AND SUBSTRATUM OF ITS BUSINESS WAS FINISHED AND VESTED WITH ATLANTIC/COCA-COLA. EVEN THE ASSETS WER E PURCHASED BY COKE FOR SEPARATE CONSIDERATION, THUS LEAVING WITH THE ASSESSEE WITH NOTHING AS THERE WAS EFFECTIVELY COMPLETE CESS ATION OF CONTRACT. THE SUBJECT MATTER OF THE CONTRACT WAS BE YOND THE REACH OF THE ASSESSEE. B SUE FOR BREACH OF CONTRACT I.E. FILE LEGAL SUIT, WHICH IS RECOURSE BY THE ASSESSEE. IT COMPELLED THE COCA COL A/ ATLANTIC TO OFFER SETTLEMENT AND WITHDRAW LITIGATION. HENCE, CO NSIDERATION WAS TO FOREGO RIGHTS TO SUE AND NOT FOR ANY NON COMPETE AGREEMENT AS HAS BEEN HELD TO SPLIT THE AMOUNT OF COMPENSATION. C THE ASSESSEE HAD A MERE RIGHT TO SUE FOR DAMAGES AND RIGHT TO SUE IS NOT A CAPITAL ASSET. IT IS A SETTLE D LAW AND DESCRIBED IN DETAILS BY THE ITAT AHMEDABAD, IN THE CASE OF DCIT V. SHRI SHEKHAR G. PATEL, I.T.A. NO.1997/AHD/2010, ON 19 MA RCH 2014 LAYING DOWN THAT: (I) THE LAW IS WELL SETTLED THAT IN A BREACH OF CONTRAC T WHAT SURVIVE IS ONLY RIGHT TO SUE. ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 29 (II) COMPENSATION RECEIVED CANNOT BE TREATED AS CONSIDER ATION BECAUSE RIGHT TO SUE IS NOT A PROPERTY UNDER SECT ION 6(E) OF THE PROPERTY ACT AND THUS DID NOT BECOME A CAPITAL ASSET UNDER SECTION 2(14) OF THE ACT. THERE WAS A BREACH OF CONTRACT AND THE APPELLANT RECEIVED DAMAGES IN SATI SFACTION THEREOF. (III) IT DID NOT CONSTITUTE A CAPITAL ASSET WHICH COULD B E TRANSFERRED UNDER THE TRANSFER OF PROPERTY ACT AS WELL AS DID N OT FALL WITHIN THE PROVISIONS OF SECTION 2(14) R.W.S. 45 OF THE ACT. (IV) SECTION 6(E) OF THE TRANSFER OF PROPERTY ACT, WHICH READS AS UNDER : 6.PROPERTY OF ANY MAY BE TRANSFERRED, EXCEPT AS OT HERWISE PROVIDED BY THIS ACT OR BY ANY OTHER LAW FOR THE TI ME BEING IN FORCE:..... (E) A MERE RIGHT TO SUE CANNOT BE TRANSFERRED.' THE WORD TRANSFER IN RELATION TO CAPITAL ASSET HA S BEEN DEFINED IN SECTION 2(47) OF THE INCOME-TAX ACT, 1961, WHICH IN CLUDES SALE, EXCHANGE OR RELINQUISHMENT OF THE ASSET OR THE EXTI NGUISHMENT OF ANY RIGHT THEREIN'. THE DAMAGES WHICH WERE RECEIVED BY THE ASSESSEE CANNOT BE SAID TO BE ON ACCOUNT OF RELINQU ISHMENT OF ANY OF ITS ASSETS OR ON ACCOUNT OF EXTINGUISHMENT OF IT S RIGHT OF SPECIFIC PERFORMANCE UNDER THE BOTTLING AGREEMENT. (V) A MERE RIGHT TO SUE CERTAINLY CANNOT BE TRANSFERRED . (VI) THERE CANNOT BE ANY DISPUTE WITH THE PROPOSITION TH AT IN ORDER THAT A RECEIPT OR ACCRUAL OF INCOME MAY ATTRA CT THE CHARGE OF TAX ON CAPITAL GAINS THE SINE QUA NON IS THAT THE RECEIPT OR ACCRUAL MUST HAVE ORIGINATED IN A `TRANS FER' WITHIN THE MEANING OF S. 45 R/W S. 2(47) OF THE ACT. SINCE THERE COULD NOT BE ANY TRANSFER IN THE INSTANT CASE, THE AMOUNT RECEIVED BY THE APPELLANT AS COMPENSATION WAS NOT ASSESSABLE AS CAPITAL GAINS. ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 30 2.10 IT IS FURTHER CONTENDED BY LD. COUNSEL THAT: A. THERE IS NO COST OF ACQUISITION OF RIGHT TO SUE. B. ANY BREACH OF CONTRACT OR AGREEMENT ENTITLES A PERS ON TO FILE A SUIT. HOWEVER IN THIS CASE THERE IS NO AWARD BY T HE COURTS OR BY THE ARBITRATOR. THE SETTLEMENT IS MERELY AN AGREEMENT TO WITHDRAW CASES. HENCE COMPENSATION RECEIVED IS IRREFUTABLY A CONSIDERATION FOR WITHDRAWAL OF CASES . CLAIM DOES NOT GIVE RIGHT TO A DEBT TILL ADJUDICATION AND ASSESSMENT BY AN AUTHORITY. C. IT IS CLEAR THAT THE MONEY RECEIVED WAS NOT IN LIEU OF DAMAGES FOR SETTLEMENT OF ANY RIGHT OR CLAIM. NONE OF THE CASES HAD BEEN ADJUDICATED UPON BY THE COURTS OR DECIDED THRO UGH ARBITRATION OR OTHERWISE BY ATLANTIC/COCA COLA. ME RELY PENDING MULTIPLE LITIGATION BEFORE FORUMS WERE AGRE ED TO BE WITHDRAWN WHICH SAVED COCA COLA/ATLANTIS FROM LITIG ATION, WASTE OF MAN HOURS AND COST WHICH LEAD TO PAYMENT O F COMPENSATION. D. THE COMPENSATION AS PER SETTLEMENT AGREEMENT DOES N OT INDICATE ANY PARTICULAR LOSS SUFFERED BY THE ASSESS E QUA WHICH A PARTICULAR SUM IS PAID. THE MULTIPLE CASES RAISI NG ALL KINDS OF CLAIMS WERE GENERAL AND SPECIFIC IN NATURE WHICH WERE NOT QUANTIFIABLE. THE SETTLEMENT AGREEMENT REVEALS THAT AFTER NEGOTIATIONS, ATLANTIC AGREED TO PAY A LUMP SUM AMO UNT TO THE ASSESSEE AS A CONSIDERATION FOR WITHDRAWAL OF A LL THE CASES. AGREEMENT ALSO STIPULATES THAT BY THE SAID S ETTLEMENT BOTH THE PARTIES WOULD BE ABLE TO SAVE UNNECESSARY LITIGATION COST AND UNDUE HARASSMENT. CONSEQUENTLY THE COMPOS ITE SUM RECEIVED WAS TO COMPENSATE FOR AVOIDING LITIGAT ION AND HARASSMENT; SAME CANNOT BE HELD TO BE PARTIALLY REV ENUE RECEIPT. E. THE COMPOSITE AND INDIVISIBLE COMPENSATION WAS PAID BY ATLANTIC, TO AVOID ANY LITIGATION AS THAT COULD HAV E HARMED THEIR BRAND AND MARKET REPUTATION. LOOKING AT THE M ULTIPLE ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 31 LITIGATION ANY INJUNCTION FROM ANY COURT COULD HAVE ESTOPPED NEW FRANCHISE OR USE OF THE BRAND. THUS ATLANTIC/CO CA COLA PAID THE COMPENSATION TO AVOID ANY SUCH CONSEQUENCE AND TO BUY PEACE. F. SIMILAR MONEY WAS NOT TO BE PAID TO THE APPELLANT A T ANY TIME IN PART AND NEVER INTENDED TO BE PAID IN FUTUR E. THUS, IT WAS A RECEIPT WHICH WAS BY WAY OF A ONETIME WINDFAL L AND NOT RECURRING IN NATURE. CONSEQUENTLY IT CAN NEITHE R BE AN INCOME WITHIN THE MEANING OF SECTION 2(14) NOR 28(V ) OF THE INCOME-TAX ACT, 1961. G. IT IS NOT ALLEGED THAT BUSINESS OF THE ASSESSEE TO FILE CASES. HENCE COMPENSATION IN LIEU OF THE CASE WITHDRAWAL C ANNOT ALSO BE SAID TO BE A BUSINESS ACTIVITY. RELIANCE IS PLACED ON FOLLOWING CASES IN SUPPORTS O F ABOVE PROPOSITIONS: (I)IN THE CASE OF UNION OF INDIA VS RAMAN IRON FOUN DRY, 1974 AIR 1265, 1974 SCR (3) 556, HONBLE SUPREME COURT HELD THAT: 18 WHEN THERE IS A BREACH OF CONTRACT, THE PARTY WHO C OMMITS THE BREACH DOES NOT EO INSTANTI INCUR ANY PECUNIARY OBLIGATION, NOR DOES THE PARTY COMPLAINING OF THE BREACH BECOMES ENTITLE D TO A DEBT DUE FROM THE OTHER PARTY. THE ONLY RIGHT WHICH THE PARTY AGG RIEVED BY THE BREACH OF THE CONTRACT HAS IS THE RIGHT TO SUE FOR DAMAGES. T HAT IS NOT IN ACTIONABLE CLAIM AND THIS POSITION IS MADE AMPLY CLEAR BY THE AMENDMENT IN S. 6(E) OF THE TRANSFER OF PROPERTY ACT, WHICH PROVIDES THA T A MERE RIGHT TO SUE FOR DAMAGES CANNOT BE TRANSFERRED. (II)IN THE CASE OF COMMISSIONER OF INCOME-TAX V. J . DALMIA, [1985] 20 TAXMAN 86 (DELHI), BY THE HONBLE HIGH COURT OF DEL HI HELD THAT: 9.. WE ARE TO DETERMINE WHETHER DAMAGES RECEIVED BY THE ASSESSEE WERE IN RESPECT OF TRANSFE R OF A 'CAPITAL ASSET'. THERE WAS A BREACH OF CONTRACT AND THE ASSESSEE REC EIVED DAMAGES IN SATISFACTION THEREOF. HE HAD A MERE RIGHT TO SUE FO R DAMAGES. ASSUMING ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 32 THE SAME TO BE 'PROPERTY', THIS COULD NOT BE TRANSF ERRED UNDER SECTION 6(E ). THE RELEVANT PROVISION MAY BE REPRODUCED: '6. PROPERTY OF ANY KIND MAY BE TRANSFERRED, EXCEPT AS OTHERWISE PROVIDED BY THIS ACT OR BY ANY OTHER LAW FOR THE TI ME BEING IN FORCE, (E) A MERE RIGHT TO SUE CANNOT BE TRANSFERRED.' WE DO NOT FIND ANY EXCEPTION UNDER THE ACT THOUGH T HE WORD 'TRANSFER' IN RELATION TO CAPITAL ASSET HAS BEEN DEFINED IN SECTI ON 2(47) WHICH INCLUDES SALES, EXCHANGE OR RELINQUISHMENT OF THE ASSET OR T HE EXTINGUISHMENT OF ANY RIGHT THEREIN. THE DAMAGES, WHICH WERE RECEIVED BY THE ASSESSEE, CANNOT BE SAID TO BE ON ACCOUNT OF RELINQUISHMENT O F ANY OF HIS ASSET' OR ON ACCOUNT OF EXTINGUISHMENT OF HIS RIGHT OF SPECIF IC PERFORMANCE UNDER THE CONTRACT FOR SALE. 10. UNDER SECTION 5 OF THE TRANSFER OF PROPERTY ACT , 'TRANSFER OF PROPERTY' MEANS AN ACT BY WHICH A PERSON CONVEYS PROPERTY TO ANOTHER AND 'TO TRANSFER PROPERTY' IS TO PERFORM SUCH ACT. A MERE R IGHT TO SUE MAY OR MAY NOT BE PROPERTY BUT IT CERTAINLY CANNOT BE TRANSFER RED. THERE CANNOT BE ANY DISPUTE WITH THE PROPOSITION THAT IN ORDER THAT A RECEIPT OR ACCRUAL OF INCOME MAY ATTRACT THE CHARGE OF TAX ON CAPITAL GAI NS, THE SINE QUA NON IS THAT THE RECEIPT OR ACCRUAL MUST HAVE ORIGINATED IN A 'TRANSFER' WITHIN THE MEANING OF SECTION 45, READ WITH SECTION 2(47) , OF THE ACT. SINCE THERE COULD NOT BE ANY TRANSFER IN THE INSTANT CASE, IT H AS TO BE HELD THAT THE AMOUNT OF RS. 1,02,500 RECEIVED BY THE ASSESSEE AS DAMAGES WAS NOT ASSESSABLE AS CAPITAL GAINS. 11 IT WAS ALSO ARGUED ON BEHALF OF THE ASSESSEE THA T THE COST TO THE ASSESSEE OF THE ACQUISITION OF HIS AFORESAID RIGHT UNDER THE CONTRACT FOR SALE WAS NIL AND AS SUCH, THE TRANSFER WOULD BE OUT SIDE THE SCOPE OF SECTION 48 OF THE ACT AND IN THIS CONTEXT, RELIANCE WAS PLACED ON A ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 33 DECISION OF THE SUPREME COURT IN CIT V. B.C. SRINIV ASA SETTY [1981] 128 ITR 294. BUT, THE VIEW WHICH WE HAVE TAKEN MAKES IT UNNECESSARY TO GO INTO THIS QUESTION. (III) BARODA CEMENT & CHEMICALS LTD. V. COMMISSIONE R OF INCOME-TAX, [1986] 158 ITR (GUJ) IT WAS HELD THAT: 5. THE CONTENTION OF THE ASSESSEE IS THAT ON BREACH OF THE CONTRACT BY K.C.P. LTD. AND THE SALE OF THE SUBJECT-MATTER TO A THIRD PARTY, THE ONLY RIGHT WHICH SURVIVED IN THE ASSESSEE WAS A RIGHT TO SUE FOR ONE OR MORE OF THE RELIEFS AVAILABLE ON BREACH OF CONTRACT. THIS R IGHT WAS NOT AN ACTIONABLE CLAIM WITHIN THE MEANING OF SECTION 3 OF THE TRANSFER OF PROPERTY ACT, SINCE IT COULD NOT BE SAID TO BE A DE BT OR A BENEFICIAL INTEREST IN MOVABLE PROPERTY NOT IN THE POSSESSION OF THE ASSESSEE.. 6. WHEN A CONTRACT IS BROKEN, IT GIVES RISE TO A CI VIL WRONG WHICH MAY ENTITLE THE INJURED PARTY TO SUE THE WRONG DOER FOR DAMAGES LIQUIDATED OR UNLIQUIDATED, OR FOR SPECIFIC PERFORMANCE AND IN SO ME CASES FOR RESTITUTION OR EVEN AN INJUNCTION BUT O NCE THERE IS A BREACH OF CONTRACT AND THE DEFAULTING PARTY NO T ONLY REFUSES TO PERFORM HIS PART OF THE CONTRACT BUT ALSO DISPOSES OF THE SUBJECT-MATTER, THE INJURED PARTY HAS NOTHING LEFT IN THE CONTRACT EXCEPT THE RIGHT TO SUE FOR DAMAGES.. AFTER THE AMENDMENT A MERE RIGHT TO SUE, WHETHER ARISING OUT OF TORTUOUS ACT OR EX-CONTRACTUAL IS NO T TRANSFERABLE. IN MULLA'S TRANSFER OF PROPERTY ACT, SEVENTH EDN., WE FIND THE FOLLOWING STATEMENT:- 'BUT A DEBT OR ACTIONABLE CLAIM MUST BE DISTINGUISH ED FROM A RIGHT TO SUE FOR DAMAGES. AFTER BREACH OF A CONTRACT FOR THE SAL E OF GOODS NOTHING IS LEFT BUT A RIGHT TO SUE FOR DAMAGES WHICH CANNOT BE TRANSFERRED. BUT BEFORE BREACH THE BENEFIT OF AN EXECUTORY CONTRACT FOR THE SALE OF GOODS MAY GENERALLY BE TRANSFERRED AND THE BUYER HAS THE RIGHT TO SUE FOR THE GOODS.' . HOWEVER, WHEN THE CONTRACT IS FINALLY B ROKEN AND IS NO MORE ALIVE FOR PERFORMANCE, THE INJURED PARTY HAS MERELY THE RIGHT TO SUE FOR ONE OR MORE OF THE AFOREMENTIONED REMEDI ES AND NOTHING MORE. ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 34 IN THE INSTANT CASE THE FACTS SHOW THAT K.C.P. LTD. HAD NOT ONLY COMMITTED A BREACH OF THE CONTRACT BUT HAD ALSO PUT THE SUBJE CT-MATTER THEREOF BEYOND THE REACH OF THE ASSESSEE BY DISPOSING IT OF TO A THIRD PARTY, PRESUMABLY A BONA FIDE PURCHASER. THERE WAS A TOTAL CESSATION OF THE CONTRACT AND THE ONLY RIGHT WHICH SURVIVED IN THE A SSESSEE WAS TO SUE THE DEFAULTING PARTY WHICH COULD NOT BE TRANSFERRED BY VIRTUE OF THE EMBARGO CONTAINED IN SECTION 6(E). THE CASE LAW ALSO LENDS SUPPORT TO THIS VIEW. (IV)DCIT V. SHRI SHEKHAR G.PATEL I.T.A. NO.1997/A HD/2010 ITAT ' D ' BENCH, AHMEDABAD DTD 19/03/2014 (PAGES 97 TO 98 OF PAPER BOOK) BRIEF FACTS OF THE CASE ; (I)THE ASSESSEE HAD ENTERED INTO AGREEMENTS FOR PUR CHASE/SALE FOR ACQUIRING DIFFERENT PIECE OF LANDS FROM THE FIVE DI FFERENT COMPANIES (II)WHEN THE SAID COMPANIES DID NOT EXECUTE THE SAL E DEED THE ASSESSEE APPROACHED TO THE ARBITRATOR AND THE ARBITRATION PR OCEEDINGS WERE INITIATED UNDER THE ARBITRATION AND CONCILIATION ACT, 1996. (III)AS PER THE SETTLEMENT ARRIVED AT THE LD.ARBITR AL TRIBUNAL, IT WAS CLEARLY STIPULATED IN THE SETTLEMENT THAT THE ASSES SEE SHALL ACCEPT THE AMOUNT IN FULL AND FINAL SETTLEMENT FOR RELINQUISHI NG THE RIGHT TO SUE FOR THE SPECIFIC PERFORMANCE OF THE AGREEMENT. (IV)THE ASSESSING OFFICER(AO) MADE ADDITION ON ACCO UNT OF LONG TERM CAPITAL GAIN RECEIVED AS DAMAGES AWARDED UNDER THE ARBITRATION AND CONCILIATION ACT, 1996. 4.1.. HOWEVER, THE LD.CIT(A) FOLLOWING THE DECISION OF HO N'BLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF B ARODA CEMENT AND CHEMICALS LTD. VS. CIT(SUPRA) ALLOWED THE APPEAL OF THE ASSESSEE. IN THE CASE OF BARODA CEMENT AND CHEMICALS LTD. VS. CIT(SU PRA), THE ASSESSEE ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 35 HAD ENTERED INTO AN AGREEMENT WITH ONE M/S K.C.P. L TD., MADRAS, CONTRACTED TO SELL A SECOND HAND GHH MILL SUB SEQUENTLY, THE VENDOR COMMITTED A BREACH OF THE CONTRACT BY DEFAULTING TO SELL THE MACHINERY TO THE ASSESSEE-COMPANY. THE ASSESSEE AND THE VENDOR ARRIVED AT THE SETTLEMENT AND THE ASSESSEE IN THAT CASE RECEIVED C OMPENSATION. THE COMPENSATION SO RECEIVED WAS TAXED BY THE A.O. THE FOLLOWING QUESTION HAD BEEN REFERRED TO THE HON'BLE HIGH COURT FOR ITS OPINION:- 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE, THE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT THE AMOUN T RECEIVED BY THE ASSESSEE-COMPANY BY WAY OF DAMAGES FOR BREACH OF CO NTRACT OF SALE OF MOVABLE PROPERTY WAS CHARGEABLE TO TAX UNDER THE HE AD `CAPITAL GAINS'?' 4.2. THE HON'BLE GUJARAT HIGH COURT AFTER EXAMIN ING VARIOUS JUDICIAL PRONOUNCEMENTS AT LENGTH OBSERVED THAT PAYMENT BY W AY OF COMPENSATION OR DAMAGES IS DISTINCT FROM CONSIDERATION FOR COMPL YING WITH THE CONTRACT. THE HON'BLE HIGH COURT AFTER EXAMINING AL L ASPECTS ANSWERED THE QUESTION AGAINST THE REVENUE. 4.3. THE RELIANCE WAS ALSO PLACED ON THE DECISION O F HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT VS. J.DALMIA REPO RTED AT 149 ITR 215. THE QUESTION BEFORE THE HON'BLE DELHI HIGH COURT WA S WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE AMO UNT OF RS.1,02,500/- IS ASSESSABLE AS CAPITAL GAINS OTHER THAN LONG TERM CA PITAL GAINS IN THE HANDS OF THE ASSESSEE ?' THE FACTS IN THAT CASE WER E THAT M/S.SATISH KUMAR SOOD & SONS WERE THE OWNERS OF THIS PROPE RTY. THEY ENTERED INTO AN AGREEMENT TO SELL WITH ONE KRISHAN PRASAD. THERE WAS A DEFAULT OF AGREEMENT AND THE DISPUTE WAS REFERRED TO THE ARBIT RAL TRIBUNAL. THE ARBITRATOR GAVE HIS AWARD AMOUNTING TO RS.1,02,500/ - 'AS DAMAGES FOR COMPENSATION FOR BREACH OF THE CONTRACT'. IN HI S INCOME-TAX RETURN THE ASSESSEE DID NOT CLAIM IT AS A CAPITAL GAIN.THE ITO REJECTED HIS CONTENTION AND THE MATTER TRAVELLED UPTO THE TRIBUNAL AND AT T HE INSTANCE OF THE REVENUE THE TRIBUNAL REFERRED THE AFORESAID QUESTIO N OF LAW FOR DETERMINATION BEFORE THE HON'BLE DELHI HIGH COURT. THE HON'BLE DELHI HIGH COURT OBSERVED AS UNDER:- ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 36 'WE ARE TO DETERMINE WHETHER DAMAGES RECEIVED BY TH E ASSESSEE WERE IN RESPECT OF TRANSFER OF A `CAPITAL ASSET'. THERE WAS A BREACH OF CONTRACT AND THE ASSESSEE RECEIVED DAMAGES IN SATISFACTION T HEREOF. HE HAD A MERE RIGHT TO SUE FOR DAMAGES. ASSUMING THE SAME TO BE ` PROPERTY' THIS COULD NOT BE TRANSFERRED UNDER S. 6(E) OF THE TRANSFER OF PROPERTY ACT. THE RELEVANT PROVISION MAY BE REPRODUCED: '6. PROPERTY OF ANY KIND MAY BE TRANSFERRED, EXCEPT AS OTHERWISE PROVIDED BY THIS ACT OR BY ANY OTHER LAW FOR THE TIME BEING IN FORCE:..... (E) A MERE RIGHT TO SUE CANNOT BE TRANSFERRED.' WE DO NOT FIND ANY EXCEPTION UNDER THE IT ACT THOUG H THE WORD `TRANSFER' IN RELATION TO CAPITAL ASSET HAS BEEN DEFINED IN S. 2(47) OF THE ACT WHICH INCLUDES `SALE, EXCHANGE OR RELINQUISHMENT OF THE A SSET OR THE EXTINGUISHMENT OF ANY RIGHT THEREIN'. THE DAMAGES W HICH WERE RECEIVED BY THE ASSESSEE CANNOT BE SAID TO BE ON ACCOUNT OF RELINQUISHMENT OF ANY OF HIS ASSETS OR ON ACCOUNT OF EXTINGUISHMENT OF HI S RIGHT OF SPECIFIC PERFORMANCE UNDER THE CONTRACT FOR SALE.' 4.4 THE HON'BLE HIGH COURT FURTHER HELD THAT :- 'U NDER S. 5 OF THE TRANSFER OF PROPERTY ACT, `TRANSFER OF PROPERTY' ME ANS AN ACT BY WHICH A PERSON CONVEYS PROPERTY TO ANOTHER AND `TO TRANSFER PROPERTY' IS TO PERFORM SUCH ACT. A MERE RIGHT TO SUE MAY OR MAY NO T BE PROPERTY BUT IT CERTAINLY CANNOT BE TRANSFERRED. THERE CANNOT BE AN Y DISPUTE WITH THE PROPOSITION THAT IN ORDER THAT A RECEIPT OR ACCRUAL OF INCOME MAY ATTRACT THE CHARGE OF TAX ON CAPITAL GAINS THE SINE QUA NON IS THAT THE RECEIPT OR ACCRUAL MUST HAVE ORIGINATED IN A `TRANSFER' WITHIN THE MEANING OF S. 45 R/W S. 2(47) OF THE ACT. SINCE THERE COULD NOT BE A NY TRANSFER IN THE INSTANT CASE, IT HAS TO BE HELD THAT THE AMOUNT OF RS.1,02, 500/- RECEIVED BY THE ASSESSEE AS DAMAGES WAS NOT ASSESSABLE AS CAPITAL G AINS.' (V) GOVINDBHAI C. PATEL V. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 9, AHMEDABAD, [2010] 36 SOT 270 (AHD.) 12. IN VIEW OF THE ABOVE PROVISIONS, THE SUM RECEIVED O R RECEIVABLE IN CASH OR KIND UNDER AN AGREEMENT FOR NOT CARRYING OU T ANY ACTIVITY IN ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 37 RELATION TO ANY BUSINESS OR NOT SHARING THE RECEIPT S FROM KNOW-HOW ETC., THE VALUE OF ANY BENEFIT WILL BE TAXABLE UNDER SECT ION 28(VA) OF THE ACT. BUT FROM THE FACTS OF THE PRESENT CASE, IT CANNOT B E SAID THAT THE ASSESSEE WAS CARRYING ON BUSINESS OF OBTAINING LOANS OR WAS IN THE BUSINESS OF MONEY-LENDING OR ANY OTHER RELATED BUSINESS, BUT TH E TRANSACTION WAS OUT OF THE AMOUNT STANDING AS LIABILITY IN EARLIER YEAR S CREDITED TO THE CAPITAL ACCOUNT BY THE ASSESSEE IN THE BOOKS OF ACCOUNT AS COMPENSATION FOR NOT ENFORCING HIS RIGHTS TO SUE IN THE COURT OF LAW ON ACCOUNT OF FULL AND FINAL SETTLEMENT. THE ASSESSEE HAS NOT RECEIVED ANY BENEF IT IN CASH OR KIND WHICH COULD BE VALUED IN THE NATURE OF INCOME ARISI NG FROM THE BUSINESS FOR NOT COMPETING. THE PROVISIONS OF SECTION 28(VA) OF THE ACT PROVIDES THAT ANY SUM WHETHER RECEIVED OR RECEIVABLE IN CASH OR KIND UNDER AN AGREEMENT FOR NOT CARRYING OUT ANY ACTIVITY IN RELA TION TO ANY BUSINESS OR NOT TO SHARE ANY KNOW-HOW, PATENT, COPYRIGHT, TRADE MARK, LICENCE, FRANCHISE OR ANY OTHER BUSINESS OR COMMERCIAL RIGHT OF SIMILAR NATURE OR INFORMATION OR TECHNIQUE LIKELY TO ASSIST IN THE MA NUFACTURE OR PROCESSING OF GOODS OR PROVISION FOR SERVICES, SHALL BE CHARGE ABLE TO INCOME-TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PR OFESSIONS'. IN VIEW OF THE ABOVE FACTS AND DISCUSSIONS, THE COMPENSATION R ECEIVED IN LIEU OF FOREGOING A RIGHT TO SUE DOES NOT FALL UNDER PROVIS IONS OF SECTION 28(VA) OF THE ACT. WE FURTHER FIND FROM THE FACTS OF THE CASE THAT THE ASSESSEE HAS NOT RECEIVED THIS AMOUNT UNDER AN AGREEMENT FOR NOT CARRYING OUT ACTIVITY IN RELATION TO ANY BUSINESS OR NOT TO SHARE ANY KNO W-HOW, PATENT, COPYRIGHT, TRADEMARK, LICENCE, FRANCHISE OR ANY OTH ER BUSINESS OR COMMERCIAL RIGHT OF SIMILAR NATURE OR INFORMATION O R TECHNIQUE LIKELY TO ASSIST IN THE MANUFACTURE OR PROCESSING OF GOODS OR PROVISION FOR SERVICES, UNDER THE HEAD 'PROFIT & GAINS OF BUSINES S OR PROFESSION'. THIS PROVISION IS FOR TAXING THE RECEIPT BY THE ASSESSEE IN THE NATURE OF NON- COMPETE FEE AND EXCLUSIVITY RIGHTS AND NOT THE RECE IPT AS RECEIVED BY THE ASSESSEE. THE RECEIPT RECEIVED BY THE ASSESSEE HAS WRITTEN OF F THE SAME AS COMPENSATION/DAMAGES FOR RELINQUISHMENT OF RIGHT TO SUE IN COURT OF LAW AND CREDITED THE SAME IN THE CAPITAL ACCOUNT AS CAP ITAL RECEIPT. ACCORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT THI S PROVISION OF SECTION 28(VA) OF THE ACT WILL NOT APPLY TO THE FACTS OF TH E PRESENT CASE. ACCORDINGLY, THIS APPEAL OF THE ASSESSEE IS ALLOWED . (VI) 195 TAXMAN 131 (BOM.) CIT V DAVID LOPES MENEZ ES ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 38 (VII) M/S.CARNIVAL INVESTMENTS V I.T.O. ITA NO.568 /KOL/2011 03.05.2013 2.11 BASED ON THE ABOVE SUBMISSION AND CASE LAWS LD . COUNSEL FOR THE ASSESSEE, VEHEMENTLY CONTENDS THAT THE PROVISIONS O F SECTION 28(II)(C) OF THE ACT AS APPLIED BY THE LD. AO OR THE PROVISIONS OF SECTION 28(VA) AS APPLIED BY THE LD. CIT(A), HAVE NO APPLICABILITY TO THE FACTS OF THIS CASE. THE RECEIPT OF RS.8,16,22,040 IS NEITHER TAXABLE UN DER SECTION 28(II)(C) NOR UNDER SECTION 28(VA). THE RECEIPT BEING FOR PAY MENT OF COMPENSATION FOR WITHDRAWING COURT CASES FILED BY THE ASSESSEE A GAINST ATLANTIC, IS PURELY A CAPITAL RECEIPT NOT CHARGEABLE TO TAX. 2.12 LD. CIT(DR) MS. ROLEE AGRAWAL VEHEMENTLY CONTE NDS THAT THE SATISFACTION U/S 153C HAS BEEN PROPERLY RECORDED AN D IT CONFORMS TO THE LANGUAGE OF THE PROVISIONS. THE VALIDITY IS FURTHER DEMONSTRATED BY THE FACT THAT THOUGH THE ASSESSEE CHALLENGED THEM BY WR IT PETITION BEFORE HONBLE RAJASTHAN HIGH COURT THE SAME HAS BEEN DISM ISSED AS WITHDRAWN. 2.13 APROPOS THE MEANING AND SCOPE OF THE WORDS BE LONGS OR BELONG TO MUCH AGITATED BY THE ASSESSEE, IT IS VEHEMENTLY CONTENDED THAT SEC 153C DOES NOT REFER TO OWNERSHIP, THE REFERENCE IS TO BELONG WHICH HAS ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 39 WIDER CONNOTATIONS. BESIDES AT THE INITIAL SATISFAC TION STAGE WHAT IS REQUIRED FROM AO IS PRIMA FACIE SATISFACTION AND NO T DEMONSTRATION OF CONCLUSIVE SATISFACTION. HONBLE SUPREME COURT IN T HE CASE OF PHOOLCHAND BAJRANGLAL 203 ITR 456 HAS HELD THAT AT PRELIMIN ARY STAGE SUFFICIENCY OF REASONS CANNOT BE EXAMINED. THE INTENSE BUSINESS RE LATIONSHIP OF ASSESSEE AND CABAN GROUP AND GENUINENESS OF SEIZED DOCUMENTS HAS BEEN ACCEPTED BY THE ASSESSEE. AO OF THE SEARCHED PERSON DOES NOT KNOW WHETHER AND HOW THE ASSESSEE HAS ACCOUNTED FOR THE AMOUNTS IN Q UESTION OR NOT. CABANA GROUP DURING THEIR ASSESSMENT MADE HUGE SURR ENDER OF INCOME; LOOKING AT THE ENTIRE DOCUMENTS AO RECORDED A SATIS FACTION U/S 153C THAT RELEVANT SEIZED PAPERS BELONGED TO ASSESSEE IN QUES TION. IT HAS BEEN REPEATEDLY HELD BY COURTS THAT SUCH SATISFACTION IN PRIMARY IN NATURE. AO FOLLOWING THE STATUTE DUTIFULLY FORWARDED THOSE SEI ZED PAPERS TO ASSESEES AO. A PLAIN READING OF SEC 153C PRESCRIBES THAT AO HAS TO DO TWO THINGS; 1. VERIFY THE PAPERS WHETHER ASSESSE HAS SOME BELONGI NG TO THE TRANSACTIONS OR PAPERS (THIS IS TO BE JUDGED IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS THAT RECORDING OF SUCH SATI SFACTION IS PRIMARY IN NATURE AND ITS SUFFICIENCY CANT BE EXAM INED). 2. SEND THE SEIZED PAPERS TO ASSESSEES AO FOR FURTHER ACTION I.E. ISSUE OF NOTICE U/S 153C. ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 40 2.14 IT IS CONTENDED THAT ASSESSEE HIMSELF ACCEPTS THAT THESE PAPERS HAVE DIRECT BEARING WITH IT OVER A PERIOD OF TIME, HOWEV ER TAKES A HYPER TECHNICAL PLEA THAT BUT THEY DO NOT BELONG TO HIM. IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THIS CASE THE ASSESSEES PLEA IS N OT SUSTAINABLE AS THE SEIZED DOCUMENTS DEMONSTRATED LONG TERM FINANCIAL T RANSACTIONS, BUSINESS DISPUTES AND AWARDING OF HUGE COMPENSATION. THE GAM UT OF SEIZED PAPERS CANNOT BE HELD TO BE NOT BELONGING TO ASSESSEE. 2.15 APROPOS HONBLE DELHI HIGH COURT JUDGMENTS IN THE CASE OF PEPSICO AND PEPSICO FOODS IT IS CONTENDED THAT THEY WERE DECIDED IN THE LIGHT OF THEIR RESPECTIVE PECULIAR FACTS. RELIANCE IS PLACED ON HONBLE SUPREME COURT IN THE CASE OF CIT VS. SUN ENGINEERI NG WORKS (P) LTD. 198 ITR 297 HOLDING THAT A JUDGMENT LAYS DOWN R ATIO IN THE CONTEXT OF THE FACTS OF THAT CASE. LOOKING AT THE CONSPECTUS O F ASSESSEES CASE THEY ARE CLEARLY DISTINGUISHABLE. IT IS PLEADED THAT THE SATISFACTION RECORDED BY AO U/S 153C IS VALID, TENABLE AND DESERVES TO BE UP HELD. 2.16 APROPOS MERITS OF THE CASE LD CIT(DR) CONTENDS THAT LD. CIT(A) HAS GIVEN VERY DETAILED FINDINGS ABOUT THE CONTENTS , MEANING AND PURPORT OF VARIOUS CLAUSES OF THE SETTLEMENT AGREEMENT. A C ATENA OF CASES HAS BEEN RELIED IN SUPPORT OF VARIOUS OBSERVATIONS; SAME ARE RELIED ON BY LD. CIT(DR). IT IS PLEADED THAT THE SUM AND SUBSTANCE O F SETTLEMENT ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 41 AGREEMENT IS TO THE EFFECT THAT ASSESSEE CLOSED ITS BUSINESS AND UNDERTOOK NOT TO COMPETE WITH THE COCA COLA/ ATLANTIC. THE RE VENUE AUTHORITIES ARE EMPOWERED TO BIFURCATE THE COMPOSITE RECEIPT AND CO NSIDER WHICH PART IS CAPITAL RECEIPT AND WHICH PART IS ATTRIBUTABLE AS R EVENUE RECEIPT. LD. CIT(A) HAS RIGHTLY INVOKED THE PROVISIONS OF SEC. 2 8(V)(A) TO HOLD THAT PART OF COMPENSATION RECEIVED BY ASSESSEE WAS REVEN UE RECEIPT. HIS ORDER IS RELIED ON. 2.17 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. WE DEEM IT EXPEDIENT TO FIRST DECIDE THE ISSUE ON MERITS OF TAXABILITY OF COMPENSATION. LD. CIT(A) WH ILE DECIDING THE APPEAL HAS HELD THE IMPUGNED AMOUNT TO BE SPECIFICA LLY TAXABLE U/S 28(VA) OF THE IT ACT, SAME HAS BEEN REPRODUCED ABOVE. REVE NUE HAS ACCEPTED THIS ORDER. CONSEQUENTLY ON MERITS, THE ISSUE BEFOR E US IS NARROW WHETHER THE AMOUNT IN QUESTION CAN BE HELD TO BE FA LLING WITHIN THE SCOPE OF SEC. 28(VA). SEARCH IN THE PREMISES OF CABANA GR OUP WAS CONDUCTED ON 31-7-09 WHEREAS THE SETTLEMENT AGREEMENT IN QUESTIO N AND OTHER AGREEMENTS WERE EXECUTED MUCH EARLIER ON 24-11-08. IT HAS NOT BEEN ALLEGED THAT THE AGREEMENTS ARE A SUBTERFUGE, THUS THE GENUINENESS OF AGREEMENTS IS NOT IN QUESTION. A READING OF VARIOUS CLAUSES OF SAID SETTLEMENT AGREEMENT DEMONSTRATES THAT THE CONSOLID ATE COMPENSATION WAS ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 42 PAID BY COCA COLA/ATLANTIC TO ASSESSEE BY SETTLEMEN T AGREEMENT DTD. 24- 11-08 MAINLY FOR FOLLOWING REASONS: A. THAT CERTAIN DISPUTES AROSE BETWEEN THE ASSESSEE -COMPANY AND ATLANTIC INDUSTRIES/COCO COLA INDIA PVT LTD B. THAT THE INTENTION OF THE SETTLEMENT AGREEMENT W AS TO RESOLVE THE DISPUTES AND AMICABLY SETTLE ALL DEMANDS FULLY AND FINALLY. C. THAT IN CONSIDERATION OF THE MOUNT RECEIVED FROM ATLANTIC INDUSTRIES, THE ASSESSEE-COMPANY WOULD IRREVOCABLY AND UNCONDITIONALLY RELEASE, ACQUIT, WAIVE, RELINQUISH, WITHDRAW ALL CL AIMS AND COMPLAINTS AGAINST ATLANTIC AND ITS AFFILIATES. D. THAT SATYAM WOULD NOT INITIATE AND PROCEED WITH OR PROSECUTE ANY OF THE CLAIMS OR THE COMPLAINTS AND FOREVER DISCHAR GE ATLANTIC AND/OR ITS AFFILIATES. E. THAT SATYAM RECEIVES THE CONSIDERATION AMOUNT T OWARDS FULL AND FINAL SETTLEMENT OF ALL ITS OUTSTANDING DIFFERENCES , DISPUTES, DAMAGES, CLAIMS OR DEMANDS AGAINST ATLANTIC AND/OR ITS AFFIL IATES. F. THAT ALL DISPUTES RAISED BY SATYAM SHALL S TAND FULLY AND FINALLY SETTLED. G. THAT SATYAM FULLY, COMPLETELY, IRREVOCABLY, FINA LLY AND FOREVER RELEASES, ACQUITS AND DISCHARGES ATLANTIC AND/OR IT S AFFILIATES. H. THAT THE AMOUNT RECEIVED BY SATYAM WOULD TAKE C ARE OF ANY AND ALL OR PRESENT AND FUTURE CLAIMS, CAUSES OF ACTION, RIGHTS, DEBTS, LIABILITIES, PROMISES, AGREEMENTS, DEMAND, DAMAGES, ACCOUNTINGS AND COSTS AND EXPENSES OF ANY KIND WHATSOEVER. G. THAT THE INTENT OF THE AGREEMENT IS TO COMPLETEL Y RELEASE ALL CLAIMS AGAINST ATLANTIC. ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 43 I. THAT ON RECEIPT OF SETTLEMENT AMOUNT, SATYAM WI LL BE LEFT WITH NO OTHER OUTSTANDING CLAIMS, DEMANDS, DIFFERENCES, DIS PUTES OR LIABILITIES AGAINST ATLANTIC. IN OUR CONSIDERED VIEW, ALL THE CLAUSES OF THE AGR EEMENT READ TOGETHER REFLECT THAT THE REAL INTENT, OBJECTIVE AND PURPOSE OF THE PAYMENT OF COMPENSATION AS PER SETTLEMENT AGREEMENT WAS TO ENS URE WITHDRAWAL OF ALL THE PENDING LITIGATION BY SATYAM FROM VARIOUS F ORUMS INSTITUTED FOR BREACH OF TERMS OF CONDITIONS. THE DOMINANT CONSIDE RATION FOR COMPENSATION BEING SURRENDERING THE RIGHT TO SUE; ITS NEITHER IN LIEU OF SURRENDER OF ANY AGENCY OR AGREEMENT FOR NON COMPET ITION. THIS BEING SO THE COMPENSATION NEITHER FALLS IN THE AMBIT OF SEC. 28 (II) C AS HELD BY AO NOR U/S 28 (VA) AS HELD BY LD. CIT(A). BESIDES BOTH THE AUTHORITIES IN VARIOUS PARAS OF THEIR ORDERS HAVE REFERRED TO THE FOLLOWING FACTS AND OBSERVATIONS IN RESPECT OF THESE AGREEMENTS: A). THAT CERTAIN DISPUTES AROSE BETWEEN THE A SSESSEE COMPANY AND ATLANTIC INDUSTRIES/ COCO COLA INDIA PVT. LTD. B) THAT THE INTENTION OF THE SETTLEMENT AGREEMENT W AS TO RESOLVE THE DISPUTES AND AMICABLY SETTLE ALL DEMANDS FULLY AND FINALLY. C) THAT IN CONSIDERATION OF THE MOUNT RECEIVED FROM ATLANTIC INDUSTRIES, THE ASSESSEE COMPANY WOULD IRREVOCABLY AND UNCONDITIONALLY RELEASE, ACQUIT, WAIVE, RELINQUISH, WITHDRAW ALL CL AIMS AND COMPLAINTS AGAINST ATLANTIC AND ITS AFFILIATES. ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 44 D) THAT SATYAM WOULD NOT INITIATE AND PROCEED WITH OR PROSECUTE ANY OF THE CLAIMS OR THE COMPLAINTS AND FOREVER DISCHAR GE ATLANTIC AND/OR ITS AFFILIATES. E) THAT SATYAM RECEIVED THE CONSIDERATION AMOUNT TO WARDS FULL AND FINAL SETTLEMENT OF ALL ITS OUTSTANDING DIFFERENCES , DISPUTES, DAMAGES, CLAIMS OR DEMANDS AGAINST ATLANTIC AND/OR ITS AFFIL IATES. F) THAT ALL DISPUTES RAISED BY SATYAM .SHAL L STAND FULLY AND FINALLY SETTLED. G) THAT SATYAM FULLY, COMPLETELY, IRREVOCABL Y, FINALLY AND FOREVER RELEASES, ACQUITS AND DISCHARGES ATLANTIC AND/OR IT S AFFILIATES. H) THAT THE AMOUNT RECEIVED BY SATYAM WOULD TAKE CARE OF ANY AND ALL OR PRESENT AND FUTURE CLAIMS, CAUSES OF ACTION, RIGHTS, DEBTS, LIABILITIES, PROMISES, AGREEMENTS, DEMAND, DAMAGES, ACCOUNTINGS AND COSTS AND EXPENSES OF ANY KIND WHATSOEVER. I) THAT THE INTENT OF THE AGREEMENT IS TO CO MPLETELY RELEASE ALL CLAIMS AGAINST ATLANTIC. J) THAT ON RECEIPT OF SETTLEMENT AMOUNT, SA TYAM WILL BE LEFT WITH NO OTHER OUTSTANDING CLAIMS, DEMANDS, DIFFERENCES, DISPUTES OR LIABILITIES AGAINST ATLANTIC. 2.18 WITH ALL THESE OBSERVATIONS ON RECORD, WE ARE UNABLE TO COMPREHEND AS TO HOW ANY PART OF THE COMPENSATION C AN BE ESTIMATED OR TREATED AS PAID FOR ANY NON COMPETE AGREEMENT AS IN FERRED BY LD. CIT(A) IN HIS FINDINGS AT PAGE 39 TO FOLLOWING EFFECT:- IT MAY BE NOTED THAT BY SUCH SETTLEMENT DATED 24-1 1-2008 THE APPELLANT RECEIVED TOTAL CONSIDERATION OF RS. 18.33 CRORES AN D WITH SUCH AGREEMENT ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 45 THE APPELLANT SURRENDERED ALL HIS RIGHTS OF CARRYIN G OUT ANY BUSINESS MANUFACTURING / PRODUCTION AND SALE OF CADBURY ITEM S IN RAJASTHAN STATE. 2.19 ASSESSEE HAS VEHEMENTLY DENIED HAVING ANY WHER E ADMITTED THAT PART OF THE COMPENSATION WAS FOR NON COMPETITION. IN OUR CONSIDERED VIEW THE COMPENSATION IN QUESTION WAS MEANT, INTEND ED AND PAID FOR WITHDRAWAL OF AFORESAID LITIGATION INSTITUTED BY AS SESSEE WHICH COULD HAVE RESULTED IN MANY ADVERSE CONSEQUENCES FOR THE REPUT ATION OF COCA COLA/ATLANTIC BESIDES ENTAILING HUGE COST AND EFFOR TS OF LITIGATION. RELINQUISHMENT OF RIGHT TO SUE IS NEITHER A CAPITAL ASSET NOR TAXABLE U/S 28 WHICH PROVIDES SPECIFIC TYPES OF RECEIPT TO BE HELD TAXABLE AS BUSINESS INCOME. RELINQUISHMENT OF RIGHT TO SUE DOES NOT FIN D ANY MENTION THEREIN. IN THIS EVENTUALITY WE HAVE NO HESITATION TO HOLD T HAT THE IMPUGNED AMOUNT OF RS.8,16,22,040/- IS A CAPITAL RECEIPT NOT LIABLE TO INCOME TAX. THE ADDITION IS DELETED, ASSESSEES GROUNDS IN THIS BEHALF ARE ALLOWED. 2.20 APROPOS THE ISSUE ABOUT VALIDITY OF SATISFACTI ON U/S 153C, SINCE WE HAVE ALLOWED THE RELIEF ON MERITS WE FIND NO NECESS ITY TO DWELL ON THIS TECHNICAL ISSUE. 2.21 THE GROUND NO. 5 OF THE ASSESSEE IS REGARDING LEVYING INTEREST U/S 234A, 234B AND 234C WHICH IS CONSEQUENTIAL IN NATUR E. ITA NO. 225/JP/2013 M/S. SATYAM FOOD SPECIALITIES (P) LTD. VS. DCIT , C ENTRAL CIRCLE- 2, JAIPUR . 46 3.0 IN THE RESULT, ASSESSEES APPEAL IS ALLOWED ON THESE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 27/02/2 015. SD/- SD/- VH-VKJ-EHUK VKJ-IH-RKSYKUH (T.R. MEENA) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27 TH FEB, 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. SATYAM FOOD SPECIALITIES (P) LT D. (NOW KNOWN AS KARMIC BUSINESS SPECIALITIES (P) LTD. ) NEW DELHI 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CENTRAL CIRCLE- 2, JAI PUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), JAIPUR 3. VK;DJ VK;QDR@ CIT, JAIPUR 4. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 5. XKMZ QKBZY@ GUARD FILE (ITA NO.225/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR