PARLE SOFT DRINKS P.LTD, V. JT CIT SP RG 6,

ITA 5072/MUM/2001

• Counselvise Citation: 507219914 RSA 2001
• Duration Of Justice: 12 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: misc
• Appeal Filed On: 02-08-2001
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL SPECIAL
• Assessee Lawyers: RAJAN VORA; S E DASTUR AW MR SANJEEV SHAH
• Keywords: Unexplained cash credit; Capital asset; Business income; Depreciation; Business expenditure; Additional depreciation; Cost of acquisition; Capital receipt; Revenue expenditure
• Section: 68; 54; 143(3); 234B

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI . , , !' !' !' !' #$ %& #$ %& #$ %& #$ %& , ,, , ' ' ' ' ( ( ( ( BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER . / ITA NO. 5072/MUM./2001 ( '* + ',+ / ASSESSMENT YEAR : 199899 ) PARLE SOFT DRINKS PVT. LTD. WESTERN EXPRESS HIGHWAY ANDHERI (EAST), MUMBAI 400 099 .. -. / APPELLANT * V/S JT. COMMISSIONER OF INCOME TAX SPECIAL RANGE6, AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... /0-. / RESPONDENT - . / PERMANENT ACCOUNT NUMBER AAACP4620J . / ITA NO. 5284/MUM./2001 ( '* + ',+ / ASSESSMENT YEAR : 199899 ) DY. COMMISSIONER OF INCOME TAX SPECIAL RANGE6, AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. -. / APPELLANT * V/S PARLE SOFT DRINKS PVT. LTD. WESTERN EXPRESS HIGHWAY ANDHERI (EAST), MUMBAI 400 099 .... /0-. / RESPONDENT - . / PERMANENT ACCOUNT NUMBER AAACP4620J PARLE SOFT DRINKS PVT. LTD., ETC. 2 /0( . / C.O. NO. 136/MUM./2002 ( . 5284/MUM./2002 23$ 4 ) (ARISING OUT OF ITA NO. 5284/MUM./2002 ( '* + ',+ / ASSESSMENT YEAR : 199899 ) PARLE SOFT DRINKS PVT. LTD. WESTERN EXPRESS HIGHWAY ANDHERI (EAST), MUMBAI 400 099 .. /0( / CROSS OBJECTOR * V/S DY. COMMISSIONER OF INCOME TAX SPECIAL RANGE6, AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... /0-. / RESPONDENT - . / PERMANENT ACCOUNT NUMBER AAACP4620J . / ITA NO. 877/MUM./2003 ( '* + ',+ / ASSESSMENT YEAR : 199899 ) ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE25, OLD CGO BUILDING 101, M.K. ROAD, MUMBAI 400 020 .. -. / APPELLANT * V/S PARLE BOTTLING LTD. (NOW PARLE INTERNATIONAL LTD.) WESTERN EXPRESS HIGHWAY ANDHERI (EAST), MUMBAI 400 099 .... /0-. / RESPONDENT - . / PERMANENT ACCOUNT NUMBER AAACP8417H . / ITA NO. 825/MUM./2003 ( '* + ',+ / ASSESSMENT YEAR : 199899 ) PARLE BOTTLING LTD. (NOW KNOWN AS PARLE INTERNATIONAL LTD.) WESTERN EXPRESS HIGHWAY ANDHERI (EAST, MUMBAI 400 099 .. -. / APPELLANT * V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE25, OLD CGO BUILDING 101, M.K. ROAD, MUMBAI 400 020 .... /0-. / RESPONDENT - . / PERMANENT ACCOUNT NUMBER AAACP8417H PARLE SOFT DRINKS PVT. LTD., ETC. 3 '* +5$ 6 7 / ASSESSEE BY : MR. S.E. DASTUR A/W MR. SANJEEV SHAH AND MR. RAJAN VORA ' 6 7 / REVENUE BY : DR. P. DANIEL, SPECIAL COUNSEL . / ITA NO. 744/MUM./2002 ( '* + ',+ / ASSESSMENT YEAR : 199899 ) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE25, OLD CGO BUILDING 101, M.K. ROAD, MUMBAI 400 020 .. -. / APPELLANT * V/S AQUA BISLERI LTD. WESTERN EXPRESS HIGHWAY ANDHERI (EAST), MUMBAI 400 099 .... /0-. / RESPONDENT - . / PERMANENT ACCOUNT NUMBER AABCA2056N /0( . / C.O. NO. 35/MUM./2003 ( . 744/MUM./2003 23$ 4 ) (ARISING OUT OF ITA NO. 744/MUM./2003 ( '* + ',+ / ASSESSMENT YEAR : 199899 ) PARLE BISLERI LTD. (FORMERLY KNOWN AS AQUA BISLERI LTD.) WESTERN EXPRESS HIGHWAY ANDHERI (EAST), MUMBAI 400 099 .. /0( / CROSS OBJECTOR * V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE25, OLD CGO BUILDING 101, M.K. ROAD, MUMBAI 400 020 .... /0-. / RESPONDENT - . / PERMANENT ACCOUNT NUMBER AABCA2056N '* +5$ 6 7 / ASSESSEE BY : MR. FIROZE ANDHYARAJINA ' 6 7 / REVENUE BY : DR. P. DANIEL, SPECIAL COUNSEL *' 6 $ / DATE OF HEARING 25.06.2013 % 8, 6 $ / DATE OF ORDER 20.09.2013 PARLE SOFT DRINKS PVT. LTD., ETC. 4 % % % % / ORDER #$ %& #$ %& #$ %& #$ %& , ,, , ' ' ' ' 9 9 9 9 / PER AMIT SHUKLA, J.M. THE AFORESAID APPEALS AND CROSS APPEALS ARE DIRECTE D AGAINST THE IMPUGNED SEPARATE ORDERS PASSED BY DIFFERENT COMMIS SIONER (APPEALS). SINCE ONE OF THE MAIN GROUNDS RAISED IN ALL THE APP EALS ARE COMMON AND INTERCONNECTED, THEREFORE, AS A MATTER OF CONVENIE NCE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER. 2. ONE OF THE MAIN ISSUES INVOLVED IN THESE APPEALS AR E WITH REGARD TO THE TREATMENT OF AMOUNT OF ` 16,05,82,500, RECEIVED BY PARLE SOFT DRINKS PVT. LTD. AND PARLE BOTTLING CO. LTD., EACH, TOWARDS COM PENSATION RECEIVED FROM THE COCA COLA CO., IS A CAPITAL RECEIPT OR REVENUE RECEIPT OR CAPITAL GAIN OR CASUAL INCOME AND IN WHOSE HANDS IT SHOULD BE TAXED 3. THE FACTS RELATING TO THIS ISSUE IS PERMEATING THRO UGH IN ALL THE APPEALS, ON WHICH THE VARIOUS AUTHORITIES HAVE TAKEN DIFFERE NT VIEWS AND DIFFERENT STANDS WITH REGARD TO THE TAXABILITY OF THE RECEIPT OF THE SAME COMPENSATION AMOUNT. FOR THE SAKE OF CONVENIENCE, WE FIRST TAKE UP APPEALS IN ITA NO.5072/MUM./2001, ITA NO.5284/MUM./2001 AND C.O. N O.136/MUM./2002, WHICH WERE ARGUED BY THE LEARNED SR. COUNSEL, MR. S .E. DASTUR. THE GROUNDS RAISED BY THE REVENUE IN ITA NO.5284/MUM./2001, ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) ERRED IN LAW IN DIRECTING THE ASSESSING OFFICER TO TREAT THE AMOUNT OF RS. 16,05,82,500/- BEING THE COMPENSATION RECEIVED FROM COCA COLA CO. AS LONG PARLE SOFT DRINKS PVT. LTD., ETC. 5 TERM CAPITAL GAINS WHEREAS THE ASSESSING OFFICER HA D TREATED THE SAME AS INCOME FROM OTHER SOURCES OF ALTERNATELY AS SHORT T ERM CAPITAL GAINS FOR THE REASONS DISCUSSED BY HIM IN THE ASSTT. ORDERS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CTT(A) ERRED IN LAW IN HOLDING THAT ROFR PASSED TO THE ASS ESSEE COMPANY ON ITS INCEPTION TAKE OVER BY THE CHAUHAN GROUP AUTOMATICA LLY WITHOUT EXPRESS WRITTEN CONSENT OF THE COCA COLA CO. (TCCC) IN TER MS OF LAST PARA OF EXHIBIT J TO THE MASTER AGREEMENT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) ERRED IN LAW IN ALLOWING THE CLAIM OF THE ASSESSEE AMOUNTING TO RS. 10,00,000/- BEING PROFESSIONAL FEES PAID TO MR.R.N. MUNGALE - THE DIRECTOR OF THE ASSESSEE COMPANY WHICH WAS RIGHTLY DISALLOWED B Y THE ASSESSING OFFICER U/S.37(1) OF THE I.T. ACT. 4. WITHOUT PREJUDICE TO GR.NO.3, THE LEARNED CIT(A ) ERRED IN HOLDING THAT PROVISIONS U/S.40A(2) IS NOT ATTRACTED IN THE DISAL LOWANCE OF RS.10,00,000/- WHEREAS THE ISSUE IS CLEARLY COVERED UNDER THE PROV ISIONS OF SECTION 40A(2)(B)(II) OF I.T.ACT SINCE MR.R.N. MUNGALE WAS DIRECTOR OF THE ASSESSEE COMPANY AT THE RELEVANT TIME. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) ERRED IN LAW BY HOLDING THAT NET COMPENSATION OF RS . 15,95,82,500/- RECEIVED FROM COCA COLA CO. IS LONG TERM CAPITAL GAIN AND HE NCE IT DOES NOT CONSTITUTE BOOK PROFITS AS PROVIDED IN SECTION-IL 5JA IGNORING THE DETAILED REASONS GIVEN BY THE ASSESSING OFFICER FOR THE AFORESAID ADDITION FOR COMPUTING BOOK PROFIT U/S.115JA OF I.T. ACT AND THUS THE DECISION OF CIT( A) IS IN CONTRAVENTION OF HONBLE BOMBAY HIGH COURTS DECISION IN THE CASE OF VEEKAYLAL INVESTMENT CO. PVT. LTD AND HOTEL HIRAMANI PVT. LTD.(249 ITR 597). 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO RECOMPU TE INTEREST U/S.234B ON THE RETURNED INCOME INSTEAD ON THE ASSESSED INCOME AS L EVIED BY THE ASSESSING OFFICER IGNORING THE FACT THAT SECTION-234B HAD BEE N AMENDED W.E.F. 1.4.1989 FOR LEVY OF INTEREST ON ASSESSED INCOME. IN ITA NO.5072/MUM./2001, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN IN CONCLUDING THAT THE SUM OF ` 16.05 CRORES RECEIVED BY THE APPELLANT FROM COCA COLA CO. USA, CONSTITUTED TAXAB LE CAPITAL GAINS INCOME INASMUCH AS THE TRANSACTION ATTRACTED CHARGE TO TAX UNDER SECTION 45 OF THE ACT. THE IMPUGNED CAPITAL SUM WAS NOT CHARGEABLE TO TAX INASMUCH AS THE RIGHT OF ROFR IN RESPECT OF WHICH AMOUNT HAS BEEN R ECEIVED DID NEITHER CONSTITUTE CHARGEABLE CAPITAL ASSET WITHIN THE MEAN ING OF SECTION 22(2)(A) OF THE ACT NOR DID THE TRANSACTION INVOLVE ANY TRANSFE R OF ANY CHARGEABLE ASSET WITHIN THE MEANING OF SECTION 2(47) OF THE ACT. PARLE SOFT DRINKS PVT. LTD., ETC. 6 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT ADMITTING CLAIM OF THE APPELLAN T FOR DEPRECIATION @ HIGHER RATE OF 40% IN RESPECT OF VEHICLES USED IN THE BUSI NESS OF HIRE. 4. THE RELEVANT FACTS, APROPOS THE ISSUE OF TREATMENT OF AMOUNT OF ` 16,05,82,500, WHICH ARE CULLED OUT FROM THE RECORDS AND SUBMISSIONS MADE BY EITHER PARTY ARE THAT, ALL THE AFORESAID ASSESSE ES (WHO ARE IN APPEAL) ARE PART OF PARLE GROUP OWNED BY MR. PRAKASH CHAUHAN AN D MR. RAMESH CHAUHAN. THE PARLE GROUP OF COMPANIES WERE ENGAGED IN THE BUSINESS OF MANUFACTURING, BOTTLING AND DISTRIBUTION OF SOFT DR INKS AND BEVERAGES UNDER SEVERAL POPULAR BRANDS VIZ., THUMBS UP, LIMCA, GOLD SPOT, MAAZA, CITRA, ETC., AND OTHER POPULAR BRANDS. THE PARLE GROUP OF COMPANIES ENTERED INTO A MASTER AGREEMENT WITH THE COCA COLA CO. OF U.S.A. (FOR SHORT TCCC ) ON SEPTEMBER 1993, FOR TRANSFER OF INTELLECTUAL PROPER TY RIGHTS IN THE NATURE OF TRADE MARKS, KNOWHOW, FRANCHISEE RIGHTS, ETC., IN R ESPECT OF VARIOUS BRANDS OF BEVERAGES / SOFT DRINKS OWNED BY PARLE GROUP. TH E PARTIES TO THE SAID MASTER AGREEMENT WERE AS UNDER: (I) LIMCA FLAVOURS AND FRAGRANCES LTD. (FOR SHORT LFFL ) (II) PARLE EXPORTS LTD. (III) PARLE INTERNATIONAL LTD. (IV) GOLDEN AGRO PRODUCTS PVT. LTD. AND (V) AQUA MINERALS PVT. LTD. THE AFORESAID PARTIES ALONG WITH MR. RAMESH CHAUHAN AND MR. PRAKASH CHAUHAN, HAVE BEEN REFERRED TO AS SELLER IN THE MASTER AGREEMENT AND PARLE SOFT DRINKS PVT. LTD., ETC. 7 TCCC IS THE BUYER ALONG WITH COCA COLA SOUTH ASIA H OLDING INC., AS A CONFIRMING PARTY. AFTER THE TRANSFER OF TRADEMARK, ETC., AS PER THE MASTER AGREEMENT, BOTTLING OF SOFT DRINK WAS CONTINUED BY MR. RAMESH CHAUHAN AND MR. PRAKASH CHAUHAN, THROUGH PARLE BOTTLING CO. LTD ., HAVING BOTTLING RIGHTS IN THE TERRITORY OF PUNE WHILE LFFL NOW KNOWN AS AQUA BISLERY HAVING BOTTLING RIGHTS IN THE TERRITORY OF BANGALORE RESPE CTIVELY. THE MASTER AGREEMENT WAS IN THE NATURE OF MEMORANDUM OF UNDERS TANDING WHICH PROVIDED THE DRAFTS AND UNDERSTANDING OF INDIVIDUAL AGREEMENTS FOR TRANSFER OF VARIOUS TRADE MARKS, FRANCHISEE RIGHTS, NONCOMP ETE COVENANTS, LETTER OF ARRANGEMENT, ETC. WHICH WAS TO BE EXECUTED BY THE R ESPECTIVE PARTIES. IN THE SAID AGREEMENT, THERE WAS AN ARTICLE7.01(D) WHICH CONTEMPLATED EXECUTION OF ROFR (RIGHT OF FIRST REFUSAL) AGREEMENT FOR BOTT LING RIGHTS IN THE TERRITORIES OF BANGALORE AND PUNE. THE SAID CLAUSE READS AS FOL LOWS: THE BUYER SHALL HAVE ISSUED TO LFFL THE ROFR AGREE MENT RELATING TO THE TERRITORIES FOR POONA AND BAN GALORE OR SUCH PARTS THEREOF AS MAY BE DETERMINED BY THE BUYER. THE PARTIES SHALL USE GOOD FAITH EFFORTS TO DRAW THE BOUNDARIES OF THE TERRITORIES REFERRED TO IN THE PR ECEDING SENTENCE TO CREATE EFFICIENT BOTTLING TERRITORIES BASED AS CLOSELY AS POSSIBLE ON THE APPROPRIATE GOVERNMENTAL UNITS (OR PARTS THEREOF) EXISTING AT T HE TIME OF EXECUTION OF THE RELEVANT BOTTLERS AGREEMENT AND WILL BE BASED UPON THE AREAS FOR THOSE CITIES SERVED BY THE EXISTING BOTTLERS AS OF JULY 2, 1993 FOR THOSE CITIES UNDER THE PARLE BOTTLING AGREEMENTS, AS THEN UNDERSTOOD BY TH E BUYER, AND TO BE BASED ON OPERATING (MANUFACTURING, SALES, DISTRIBUTION AN D MARKETING) ARRANGEMENTS AND PRACTICES RELATING TO THE AREAS SERVED. THE ROFR AGREEMENT WAS DEFINED IN THE MASTER AGREE MENT AS UNDER: ROFR AGREEMENT SHALL MEAN A RIGHT OF FIRST REFUSA L AGREEMENT IN THE FORM SET FORTH AS EXHIBIT J HERETO, GRANTING LFFL A RIGHT OF FIRST REFUSAL FOR THE BOTTLING RIGHTS FOR THE PRODUCTS COCA-COLA , FANTA AND SPRITE IN CERTAIN BOTTLING TERRITORIES CONTAINING THE CITIES OF POONA AND BAN GALORE, PROVIDED THAT CERTAIN STANDARDS CUSTOMA RILY USED BY THE PARLE SOFT DRINKS PVT. LTD., ETC. 8 BUYER FOR QUALIFICATION ARE MET, INCLUDING QUALITY STANDARDS AND CAPITALIZATION REQUIREMENTS. 5. THE DRAFT OF ROFR AGREEMENT WAS ELABORATED IN EXHIB ITJ OF THE MASTER AGREEMENT. FOR BOTTLING RIGHTS IN THE TERRITORY OF BANGALORE, LFFL WAS ASSIGNED TO BECOME LICENSED BOTTLER OF TCCC IN THE CITY OF BANGALORE. IT WAS ALSO AGREED UPON BY THE PARTIES IN THE MASTER AGREE MENT ITSELF, THAT A NEW COMPANY I.E., A BANGALORE SUBSIDIARY WAS TO BE ESTA BLISHED FOR CARRYING OUT BOTTLING OPERATIONS IN BANGALORE. THE ARTICLE1 OF THE MASTER AGREEMENT CONTAINED THE DEFINITION OF BANGALORE SUBSIDIARY WH ICH, INTERALIA, MEANS THAT THE COMPANY TO BE FORMED FOR THE PRODUCTION, DISTRI BUTION AND SALE OF PRODUCTS OF TCCC FOR THE CITY OR NEARBY TERRITORIES OF THE CITY OF BANGALORE. FOR THIS PURPOSE, EXHIBITL OF THE MASTER AGREEMENT PROVIDED THE MANNER AND THE GUIDELINE ON WHICH THIS BANGALORE SUBSIDIAR Y WAS TO BE ESTABLISHED, WHICH WOULD BE INITIALLY OWNED BY PARLE GROUP ENTIT IES AND THE TCCC WOULD LATER ON INVEST UP TO 30% IN THE EQUITY SHARES OF B ANGALORE SUBSIDIARY UNDER THE TERMS OF BIC SHAREHOLDER AGREEMENT. THE DEFINIT ION OF BANGALORE INVESTMENT AGREEMENT AND BIC SHAREHOLDER AGREEMENT WAS ALSO MENTIONED IN THE DEFINITION CLAUSE OF ARTICLE1. PRIOR TO THE AGREEMENT WITH THE TCCC, THE BANGALORE TERRITORY WAS SERVED BY AN INDEPENDEN T THIRD PARTY BOTTLER, M/S. BRINDAVAN BEVERAGES PVT. LTD., (FOR SHORT BBPL ) UNDER FRANCHISEE AGREEMENT DATED 13 TH NOVEMBER 1988, WITH PARLE EXPORT LTD., WHICH WAS T O RUN FOR A PERIOD OF 10 YEARS UP TO THE YEAR 1998. T HE SAID COMPANY BBPL WAS BOTTLING, SOFT DRINKS AND BEVERAGES OF THE BRAN DS OWNED BY PARLE GROUP. PARLE SOFT DRINKS PVT. LTD., ETC. 9 THIS FRANCHISEE AGREEMENT WAS LATER ON TERMINATED. THE ASSESSEE COMPANY I.E., PARLE SOFT DRINKS PVT. LTD. HAD COME INTO THE EXISTENCE, SOLELY FOR THE PURPOSE OF BOTTLING RIGHTS IN THE TERRITORY OF BANG ALORE IN TERMS OF ROFR AGREEMENT AND THE TERMS GIVEN IN EXHIBITL. THE HIS TORY OF COMING INTO THE EXISTENCE OF THIS COMPANY IS THAT, ONE OF THE COMPA NIES OF THE PARLE GROUP WAS HAVING POSSESSION OF LAND AT BANGALORE, WHICH W AS INCORPORATED ON 18 TH OCTOBER 1991, AS GENERAL KNITWEAR EXPORTS PVT. LTD. THROUGH PARLE INTERNATIONAL LTD. AND GOLDEN AGRO PRODUCTS PVT. LT D. ON 3 RD JULY 1993, 100% SHARES OF GENERAL KNITWEAR EXPORTS PVT. LTD. W AS TRANSFERRED TO PARLE INTERNATIONAL LTD. AND GOLDEN AGRO PRODUCTS PVT. LT D. LATER ON, THE NAME OF THIS COMPANY WAS CHANGED TO PARLE SOFT DRINKS PVT. LTD. W.E.F. 10 TH OCTOBER 1994. IN TERMS OF EXHIBITJ R/W EXHIBITL, THE PARL E SOFT DRINKS PVT. LTD. I.E., THE ASSESSEE HEREIN, WAS TO CONSTRUCT THE FACTORY A ND INSTALL BOTTLING FACILITIES FOR DOING BOTTLING FOR THE TCCC FOR THE BANGALORE T ERRITORY. IN ORDER TO PROVE ITS CREDENTIALS THAT IT HAD NECESSARY RESOURCES AND QUALIFICATIONS TO SETUP BOTTLING OPERATIONS IN BANGALORE, BUSINESS PLANS WE RE SUBMITTED TO TCCC IN MAY 1994 AND WAS ALSO FOLLOWED UP IN JUNE 1994. HOW EVER, AS SUBMITTED BY THE ASSESSEE, NO POSITIVE RESPONSE WAS RECEIVED FRO M TCCC. LATER ON, IN THE WAKE OF LIBERALIZATION ENVIRONMENT IN INDIA, TCCC T OOK STRATEGIC POLICY DECISION TO SETUP ITS OWN BOTTLING AT BANGALORE. T HIS INHERENTLY LEAD TO BREACH OF OBLIGATION BY TCCC IN RESPECT OF ROFR GIV EN TO THE PARLE GROUP IN THE MASTER AGREEMENT AND LEAD TO DISPUTE BETWEEN TH E PARLE GROUP AND TCCC. THIS DISPUTE WAS ULTIMATELY SETTLED WITH TCCC AGREEING TO PAY US$ 4.5 PARLE SOFT DRINKS PVT. LTD., ETC. 10 MILLION WHICH IN TERMS OF INR WAS ` 16,05,82,500. SUCH A RECEIPT OF COMPENSATION WHICH WAS IN BREACH OF ROFR IS THE SUB JECT MATTER OF DISPUTE BEFORE US WHETHER IT IS A CAPITAL RECEIPT OR REVENU E RECEIPT OR CASUAL INCOME OR TO BE TAXED AS LONG TERM CAPITAL GAIN OR SHORT T ERM CAPITAL GAIN AND ALSO IN WHOSE HANDS IT SHOULD BE TAXED. 6. IN CASE OF THE PRESENT ASSESSEE I.E., PARLE SOFT DR INKS PVT. LTD., IN THE RETURN OF INCOME FILED ON30TH NOVEMBER 1998, FOR TH E ASSESSMENT YEAR 199899, THE AMOUNT RECEIVED FROM TCCC AT ` 16,05,82,500, WAS TREATED AS CAPITAL RECEIPT NOT CHARGEABLE TO INCOME TAX. ALONG WITH THE RETURN OF INCOME, THE ASSESSEE HAS ANNEXED THE FOLLOWING NOTE : DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 199899 THE COMPANY RECEIVED AN AMOUNT OF ` 160582500 AS COMPENSATION FROM COCA COL CO. USA. I N THE ACCOUNTS FOR THE YEAR ENDED 31.3.1998, THE AFORESAI D AMOUNT RECEIVED AS DEDUCTING ` 10 LAKHS FOR PROFESSIONAL FEES PAID. IN THE RETURN OF INCOME, THE AFORESAID AMOUNT HAS BEEN TAKEN TO CAPITAL RESERVE AFTER DEDUCTING ` 10 LAKHS FOR PROFESSIONAL FEES PAID. IN THE RETURN OF INCOME , THE AFORESAID AMOUNT HAS BEEN TREATED AS CAPITAL RECEIPT NOT LIABLE TO TAX. SINCE THE SAID COMPENSATION HAS BEEN RECEIVED ON SETTLEMENT OF DISPUTE RELATING TO BOTTLING RIGHTS AFFECTING THE PROFIT MAKING BUSINESS APPARATUS, INASMUCH AS T HE BOTTLING RIGHTS BY SETTING UP A PLANT HAVE BEEN LOST. WITHOUT PREJUDICE TO THE NOTES ATTACHED TO COMPUTAT ION, THE COMPANY HAS INVESTED ` 10,00,17,600 IN UNITS SCHEME, 164 UNDER SECTION 54 EA OF THE ACT FOR COMPENSATION RECEIVED FROM M/S. COCA COLA CO. U SA ON SETTLEMENT. 7. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE NARRATED THE ENTIRE BACKGROUND AND THE FACTS UNDER WHICH SUCH AN AMOUNT OF COMPENSATION WAS RECEIVED FROM THE COCA COLA CO. THE MAIN SUBMISSION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS GIVEN BY LETTER DATED 7 TH SEPTEMBER 2000 AS TO HOW THIS AMOUNT WAS RECEIVED WHICH HAS BEEN INCORPO RATED AT PAGE4 OF THE PARLE SOFT DRINKS PVT. LTD., ETC. 11 ASSESSMENT ORDER AND FOR THE SAKE OF READY REFERENC E, THE SAME IS ALSO REPRODUCED BELOW: THE ASSESSEE COMPANY IS OWNED BY MEMBERS OF THE CH AUHAN FAMILY. THE RIGHT OF FIRST OPTION FOR SETTING UP A BOTTLING PLA N FOR THE TERRITORY) OF BANGALORE WAS AVAILABLE TO PANE GROUP FROM COCA COL A. IT WAS DECIDED THAT THE BOTTLING RIGHTS FOR BANGALORE TERRITORY BE EXPL OITED BY PARLE SOFT DRINKS (BANGALORE) LTD. MR.R.C.CHAUHAN WAS CHAIRMAN & DIRE CTOR OF THIS COMPANY. IN VIEW OF THE ABOVE, A COPY OF THE SITE PLAN OF LA ND OWNED BY PANE SOFT DRINKS (BANGALORE) LTD., (AT THAT TIME SHOWN AS GEN ERAL KNITWEAR IT WEAR EXPORTS PVT. LTD.) WAS SUBMITTED TO COCA COLA. THE BUSINESS PLAN FOR THE BANGALORE TERRITORY WAS SUBMITTED IN MAY, 1994 AND A REMINDER WAS SENT IN MAY, 1994. HOWEVER, NO POSITIVE RESPONSE WAS RECEIV ED FROM COCA COLA. THE BANGALORE BOTTLING RIGHTS DISPUTE WAS SETTLED B ASED ON MUTUAL UNDERSTANDING. THE SAID UNDERSTANDING WAS CONFIRMED BY LETTER DATED 21-07- 1997 SENT BY COCA COLA. ACCORDINGLY, AN AMOUNT US$ 4.5 MILLION WAS REMITTED INTO THE BANK A/C OF PARLE SOFT DRINKS (BANGALORE) LTD. IN RESPECT OF BANGALORE TERRITORY. THE SAID LETTER ALSO SLATED THAT TCCC INTENDED TO P ROCEED WILLS ITS OWN PLAN TO SET UP BOTTLING BUSINESS IN THE CITY OF BANGALORE A ND THAT NEITHER TCCC NOR COCA COLA SOUTH ASIA HOLDING INC. SHALL BE RESPONSI BLE OR LIABLE TO MR.RAMESH CHAUHAN OR TO THE COMPANIES OWNED BY HIM, IN THE EV ENT THE SAID COMPANIES TAKE ANY FURTHER ACTION ON THE DRAFT BUSINESS PLANS SUBMITTED IN MAY/JUNE 1994 OR PROCEED FURTHER WITH SETTING UP OF BOTTLING BUSINESS IN BANGALORE. IN THE CERTIFICATE OF FOREIGN INWARD REMITTANCE (HE PURPOSE OF REMITTANCE HAS BEEN STATED AS FLU AND FINAL SETTLEMENT OF CERTAIN DISPUTES. IN THE ACCOUNT FOR THE YEAR ENDED 31-03-1998, THE AFORESAID AMOUNT WAS CREDITED DIRECTLY TO CAPITAL RESERVES BY PANE SOFT DRINKS (BANGALORE) LT D. WIDER THE HEADING COMPENSATION RECEIVED FROM COCA COLA COMPANY, USA ON SETTLEMENT. 8. BESIDES SUBMITTING THE RELEVANT TERMS OF AGREEMENT AND EXHIBITS GIVEN IN THE MASTER AGREEMENT, THE ASSESSEE ALSO EXPLAINE D THE REASONS AS TO WHY SUCH A RECEIPT CANNOT BE TAXED IN THE HANDS OF THE ASSESSEE. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS ALSO: I) KETTLEWELL BULLEN & CO. LTD., [1964] 53 ITR 261 (SC ); II) MAHINDRA & MAHINDRA LTD., [1973] 91 ITR 130 (BOM.); III) GILLANDERS ARBUTHNOT & CO. LTD. [1964] 53 ITR 283 ( SC); AND IV) OBEROI HOTELS PVT. LTD. V/S CIT, [1999] 236 ITR 903 (SC). PARLE SOFT DRINKS PVT. LTD., ETC. 12 9. IT WAS FURTHER SUBMITTED THAT THE AMOUNT RECEIVED I S NOT TAXABLE UNDER SECTION 10(3) AS CASUAL AND NONRECURRING RECEIPT B ECAUSE THE SAID RECEIPT CANNOT BE CHARACTERISED AS INCOME. BESIDES THIS, IT WAS ALSO PLEADED THAT THE RECEIPT IN QUESTION CANNOT BE TAXED AS CAPITAL GAINS, BECAUSE THERE WAS NO COST OF ACQUISITION FOR THE SO CALLED RIGHTS IN QUESTION AND, THEREFORE, IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT I N CIT V/S B.C. SRINIVASA SETTY, [1981] 128 ITR 294 (SC), THE SAME CANNOT BE TAXED. 10. THE ASSESSING OFFICER, FIRST OF ALL, REFERRED TO TH E DEFINITION OF INCOME AS DEFINED IN SECTION 2(24) AND HELD THAT IT IS AN INCLUSIVE DEFINITION AND HAS A VERY VIDE MEANING, WHICH WOULD INCLUDE EVEN THOSE ITEMS WHICH MAY HAVE NOT BEEN SPECIFICALLY MENTIONED IN THE DEFINITION B UT PARTAKE THE CHARACTER OF INCOME IN ITS NATURAL MEANING. IN SUPPORT OF THI S CONCLUSION, HE HAS REFERRED TO VARIOUS DECISIONS OF THE HON'BLE SUPREM E COURT WHICH HAVE BEEN ELABORATED AT PAGE8 TO 10 OF THE ASSESSMENT ORDER. THEREAFTER, HE HAS DISCUSSED VARIOUS JUDGMENTS ON THE ISSUE OF CAPITAL AND REVENUE RECEIPTS AND HELD THAT THE CASES RELIED UPON BY THE ASSESSEE WERE IN THE CONTEXT OF COMPENSATION RECEIVED ON TERMINATION OF AGENCY OR S ETTLEMENT OF DISPUTES, ETC., AND ARE DISTINGUISHABLE ON FACTS, INASMUCH AS , IN THOSE CASES THERE WAS AN EXISTING BUSINESS STRUCTURE OR PROFIT EARNIN G APPARATUS WHICH WAS COMPLETELY TRANSFERRED AND/OR THERE WAS AN EXISTING VESTED RIGHT IN THE HANDS OF THE RECEIVER IN TERMS OF THE AGREEMENT. IN ASSESSEES CASE, THERE WAS NO WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND T HE TCCC FOR GRANTING PARLE SOFT DRINKS PVT. LTD., ETC. 13 THE RIGHTS TO THE ASSESSEE, BECAUSE THE ROFR AGREEM ENT WAS BETWEEN LFFL AND TCCC. FURTHER, THERE IS NO EVIDENCE THAT THE LF FL HAS ASSIGNED ROFR RIGHTS TO THE ASSESSEE. NO BUSINESS ACTIVITIES WERE CARRIED ON BY THE ASSESSEE, EXCEPT FOR THE LAND AND THERE WAS NO BUSI NESS ASSET LIKE BUILDING OR PLANT AND MACHINERY WHICH WAS HELD BY THE ASSESS EE. THUS, THE AMOUNT PAID BY THE TCCC TO THE ASSESSEE CANNOT BE SAID TO BE FOR ANY BREACH OF AGREEMENT OR SACRIFICING THE SOURCE OF INCOME, SINC E THERE WAS NO BUSINESS ACTIVITY CARRIED ON BY THE ASSESSEE COMPANY AT ALL. THERE WAS NO TRADING OR PROFIT MAKING STRUCTURE AND, HENCE, THE AMOUNT RECE IVED CANNOT BE SAID TO BE FOR LOSS OF TRADING / PROFIT MAKING STRUCTURE. H IS CONCLUSION HAS BEEN SUMMARIZED BY HIM IN PARA2.6 / PAGE12 OF THE ASSE SSMENT ORDER. HE, THUS, HELD THAT WHEN THE ASSESSEE HAD NO BUSINESS V ENTURE, NO PLANT AND MACHINERY FOR THE RUNNING OF BUSINESS OF BOTTLING, THE AMOUNT RECEIVED AS COMPENSATION IS NOT FOR DISCONTINUANCE OF BUSINESS OR INCOME GENERATING ASSET. THE AMOUNT WHICH WAS RECEIVED WAS ACTUALLY R ECEIVABLE BY LFFL BUT HAS BEEN RECEIVED BY THE ASSESSEE COMPANY. HE ALSO DISTINGUISHED ALL THE JUDGMENTS RELIED UPON BY THE ASSESSEE. LASTLY, HE R EFERRED TO THE DECISION OF KERALA HIGH COURT IN MALABAR INDUSTRIAL CO. LTD. V/S CIT, [1992] 198 ITR 611 (KER.) TO HOLD THAT THE RECEIPT SHOULD BE ASSES SED UNDER THE HEAD INCOME FROM OTHER SOURCES . HE ALSO MADE REFERENCE THAT EARLIER THIS COMPANY WAS IN THE NAME AND STYLE OF GENERAL KNIGHTWARE EXPORTS PVT. LTD. WHICH WAS NEITHER ENGAGED IN THE BUSINESS OF BOTTL ING NOR HAD ANY MACHINERY OR PLANT FOR THE PURPOSE OF BUSINESS. ITS MAIN OBJECTS WERE ALSO PARLE SOFT DRINKS PVT. LTD., ETC. 14 DIFFERENT. LATER ON, THE NAME OF THE COMPANY WAS CH ANGED TO PARLE SOFT DRINKS (BANGALORE) PVT. LTD. THUS, HE HELD THAT THE AMOUNT RECEIVED BY THE ASSESSEE COMPANY IS NOTHING BUT A REVENUE RECEIPT C HARGEABLE TO TAX. ALTERNATE PLEA OF THE ASSESSEE REGARDING TAXABILITY AS CAPITAL GAIN, HE CONCLUDED THAT IT IS A SHORT TERM CAPITAL GAIN AND FOR ARRIVING TO THIS CONCLUSION, HE HAS GIVEN A VERY DETAIL FINDING FROM PAGE22 TO 25 OF THE ASSESSMENT ORDER. THE SUM AND SUBSTANCE WAS THAT TH E RIGHT, AS PER THE AGREEMENT WHICH WAS AVAILABLE WITH THE ASSESSEE WAS FOR A PERIOD OF LESS THAN 36 MONTHS AND, THEREFORE, IT HAS TO BE TAXED O NLY AS SHORT TERM CAPITAL GAIN. 11. THE LEARNED COMMISSIONER (APPEALS), AFTER DISCUSSIN G THE FACTS STATED BY THE ASSESSING OFFICER AS WELL AS BY THE ASSESSEE , FIRST OF ALL, CLARIFIED TO THE OBSERVATIONS AND THE CONCLUSION DRAWN BY THE AS SESSING OFFICER. FINALLY, REGARDING THE ASSESSING OFFICERS ALLEGATION THAT T HE ASSESSEE WAS NEVER ENGAGED IN THE BUSINESS OF BOTTLING, HE OBSERVED TH AT THE ASSESSEE COMPANY HAS TAKEN OVER THE BUSINESS OF BOTTLING AS IT HAD REQUISITE LAND FOR THE BOTTLING PLANT; SECONDLY, WITH REGARD TO THE AS SESSEE NOT HAVING ANY PLANT AND MACHINERY FOR SUCH BUSINESS, HE OBSERVED THAT THE ROFR WAS FOR THE INTENDED BUSINESS OF SETTING UP OF BOTTLING PLA NTS AND HENCE, THESE CONDITIONS ARE NOT RELEVANT; THIRDLY, AS FAR AS THE MAIN OBJECT OF THE ASSESSEE COMPANY IS CONCERNED, HE OBSERVED THAT THE ASSESSEE HAS SHOWN BEFORE HIM THAT ARTICLE-96 AND 146 SPECIF ICALLY COVERS THE PARLE SOFT DRINKS PVT. LTD., ETC. 15 OBJECT OF MANUFACTURING AND MARKETING OF AERATED W ATERS. THUS, THESE OBSERVATIONS WERE NOT RELEVANT. LASTLY, INSOFAR AS THE ASSESSING OFFICERS OBSERVATION THAT ONLY LFFL WAS ENTITLED TO ROFR AND THE ASSESSEE NEVER GOT THE ASSIGNMENT OF ROFR, HE OBSERVED THAT THE AGREEM ENT ITSELF CLEARLY STIPULATED THAT THE LFFL SHALL CREATE A SUBSIDIARY FOR THESE TRANSACTIONS. THIS CONDITION WAS THERE IN THE MASTER AGREEMENT ITSELF. HE FURTHER OBSERVED THAT THE ASSESSEE COMPANY WAS TAKEN OVER BY THE TWO PARLE COMPANIES WITH THE SOLE OBJECT OF SETTING UP OF A BOTTLING PLANT I N JUNE 1993. THUS, THE VERY PURPOSE OF CREATION OF THE SUBSIDIARY WAS ONLY FOR THE PURPOSE OF EXPLOITING THE ROFR AND, THEREFORE, THE ASSESSING OFFICERS OB SERVATION REGARDING ABSENCE OF WRITTEN CONSENT OF TCCC HAS BECOME REDUN DANT. HE AGREED WITH THE ASSESSEES CONTENTION THAT THE PAYMENT MADE BY THE COCA COLA CO. WAS FOR THE RELINQUISHMENT OF ROFR IN TCCCS FAVOUR AND , ACCORDINGLY, HELD THAT THE ROFR HAS RIGHTLY BEEN CONSIDERED IN THE HANDS O F THE ASSESSEE COMPANY AND NOT LFFL. 12. HOWEVER, IN HIS ULTIMATE CONCLUSION ON THIS ISSUE, WHETHER IT IS A CAPITAL RECEIPT OR REVENUE RECEIPT, HE HELD THAT REASONING OF THE ASSESSING OFFICER THAT THE RECEIPT IN QUESTION CANNOT BE ACCEPTED AS CAPITAL RECEIPT IS CORRECT. THIS RECEIPT IS NOTHING BUT HAS ARISEN ON TRANSFER OF ASSET IN THE FORM OF RIGHT, WHICH HAS BEEN ENVISAGED IN SECTION 55(2) CL AUSE (A). HE ALSO ACCEPTED THE ASSESSEES ALTERNATE PLEA THAT RECEIPT IN QUESTION HAS TO BE TREATED AS CAPITAL GAIN BUT HE DISAGREED WITH THE A SSESSEES CONTENTION THAT THERE IS NO COST OF ACQUISITION, BECAUSE SECTION 55 (2) WAS MODIFIED BY THE PARLE SOFT DRINKS PVT. LTD., ETC. 16 FINANCE ACT, 1997, W.E.F. 1 ST APRIL 1998, TO INCLUDE SUCH KIND OF RIGHT AND COST OF ACQUISITION HAS TO BE TAKEN AS NIL . LASTLY, WHETHER IT IS A LONG TERM CAPITAL GAIN OR SHORT TERM CAPITAL GAIN, HE ANALYSE D THE SEQUENCE OF EVENT OF THESE TRANSACTION IN THE FOLLOWING MANNER AND HELD IT TO BE LONG TERM CAPITAL GAIN, AFTER OBSERVING AND HOLDING AS UNDER: 1. THE AGREEMENT BY TCCC WITH LFFL ON 11.11.93 GRANTIN G ROFR TO THE SUBSIDIARY TO BE TREATED BY LFFL WITH AN INBUILT ST AKE OF 30% IN THE NEWLY CREATED SUBSIDIARY. 2. THE ASSURANCE OF RAMESH CHAUHAN AND PRAKASH CHAUHAN TO CREATE THE SUBSIDIARY BEFORE 31 ST MARCH 1994. 3. THE TAKING OVER OF M/S. GENERAL KNITWEAR EXPORTS PV T. LTD. CHANGING THE NAME OF PARLE SOFT DRINKS AND SUBMITTING THE DE PRECIATION OF THE LAND TO M/S. TCCC FOR APPROVAL IN JUNE 1993. 5.2 THESE FACTORS INDICATE THAT THE ROFR HAS BEEN ASSIGNED ON THE DATE OF CREATING OF THE SUBSIDIARY SINCE THE OBJECT OF SUCH CREATION OF A NEW COMPANY WAS TO DEVELOP THE RIGHT FOR PROFIT. WITH COMING IN TO EXISTENCE OF THE SUBSIDIARY COMPANY IE., THE APPELLANT, THE ROFR HAS PASSED TO THE APPELLANT COMPANY. THE CONSENT OF TCCC IS EVIDENT FROM THE PA YMENT BEING MADE TO THE APPELLANT COMPANY INSTEAD OF TO LFFL. CONSIDERI NG ALL THESE FACTORS, I HOLD THAT THE TRANSACTION ATTRACKS LONG TERM CAPITAL GAI N. THE ASSESSING OFFICER IS DIRECTED TO TREAT THE RECEIPT AS LONG TERM CAPITAL GAIN. 13. BEFORE STATING THE ARGUMENTS PLACED BY BOTH THE PAR TIES, WE WOULD LIKE TO DISCUSS THE TREATMENT OF RECEIPT AS GIVEN BY THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) IN THE CASE OF AQUA BISLERI LTD. AND PARLE BOTTLING LTD. WHICH ARE ALSO THE SUBJECT MATTER OF APPEAL BEFORE US, FOR THE BETTER APPRECIATION OF THE ISSUE INVOLVED IN THIS A PPEAL. AS ALREADY STATED IN CASE OF PARLE SOFT DRINKS PVT. LTD., THE ASSESSING OFFICER, FIRST OF ALL, HAS STATED THAT THE ROFR WAS IN THE FAVOUR OF LFFL AS P ER EXHIBITJ OF THE MASTER AGREEMENT AND NOT IN THE FAVOUR OF PARLE SOFT DRINK S PVT .LTD. DESPITE THIS, HE TREATED THE AMOUNT RECEIVED BY PARLE SOFT DRINKS PVT. LTD. FROM THE COCA PARLE SOFT DRINKS PVT. LTD., ETC. 17 COLA CO. IN BREACH OF ROFR AGREEMENT AS REVENUE REC EIPT AND ALTERNATIVELY SHORT TERM CAPITAL GAIN AS THERE WAS TRANSFER OF AS SET IN THE FORM OF BOTTLING RIGHT AND HAS TAXED THE ENTIRE AMOUNT. THUS, ON ONE HAND, HE SAYS THE RECEIPT DOES NOT BELONG TO THE ASSESSEE AND ON THE OTHER HAND HE IS TAXING THE SAME IN THE HANDS OF THE ASSESSEE. IN THE CASE OF AQUA BISLERI LTD., I.E., ERSTWHILE LFFL, THE ASSESSING OFFICER HAS TREATED T HE ENTIRE AMOUNT RECEIVED FROM THE COCA COLA CO. AMOUNTING TO ` `` ` 32,11,20,000, ON ACCOUNT OF SETTLEMENT OF DISPUTE ARISING OUT OF ROFR FOR THE T ERRITORY OF BANGALORE AND PUNE, AS LONG TERM CAPITAL GAIN IN THE HANDS OF LFF L AND THE ADDITION WAS MADE ON THE SUBSTANTIVE BASIS. THUS, THE TOTAL CONS IDERATION RECEIVED BY PARLE BOTTLING PVT. LTD. AND PARLE SOFT DRINKS PVT. LTD., WAS ADDED ON SUBSTANTIVE BASIS IN THE HANDS OF LFFL I.E., AQUA B ISLERI LTD. WHILE DOING SO, HE HAS TAKEN THE COST OF ACQUISITION AT NIL IN VIEW OF THE PROVISIONS OF SECTION 55(2). IN THE FIRST APPEAL, THE LEARNED COM MISSIONER (APPEALS) HAS DELETED THE ADDITION ON THE GROUND THAT THE ASSESSE E AQUA BISLERI LTD. WAS NEVER IN THE BOTTLING BUSINESS AND DID NOT POSSESS THE REQUISITE INFRASTRUCTURE. THE ROFR WAS NEVER VESTED WITH THE LFFL AND, THEREFORE, HE SET ASIDE THE ENTIRE ACTION OF THE ASSESSING OFFICE R IN TAXING THE ENTIRE AMOUNT OF ` 32,11,20,000 IN THE HANDS OF THE ASSESSEE. THUS, T HE ENTIRE CAPITAL GAIN ADDED ON SUBSTANTIVE BASIS, STANDS DEL ETED FROM THE STAGE OF LEARNED COMMISSIONER (APPEALS) AGAINST WHICH THE DE PARTMENT HAS COME INTO APPEAL BEFORE US. PARLE SOFT DRINKS PVT. LTD., ETC. 18 14. IN THE THIRD CASE OF PARLE BOTTLING CO. LTD., THE A SSESSING OFFICER HAS TREATED THE RECEIPT OF ` `` ` 16,05,60,000, AS LONG TERM CAPITAL GAIN, HOWEVER, ASSESSED THE SAME ON PROTECTIVE BASIS, IN VIEW OF T HE FACT THAT, ALREADY SUBSTANTIVE ADDITION ON ACCOUNT OF CAPITAL GAIN HAS BEEN TAXED IN THE HANDS OF AQUA BISLERI LTD. THE LEARNED COMMISSIONER (APPE ALS) IN THIS CASE HAS TAKEN ALL TOGETHER DIFFERENT STAND AND AFTER DISCUS SING THE ISSUE IN DETAIL HELD THAT IT IS NOT A CAPITAL GAIN BUT IT IS A NONRECUR RING CASUAL INCOME WHICH IS TO BE TAXED UNDER SECTION 10(3) OF THE ACT AND, THEREF ORE, THE ACTION OF THE ASSESSING OFFICER IN TREATING THE RECEIPT AS LONG T ERM CAPITAL GAIN AND TAXING IT ON PROTECTIVE BASIS, HAS NO BASIS. THUS, HE HELD THAT IT IS TO BE TAXED AS CASUAL AND NONRECURRING RECEIPT. 15. THUS, VARIOUS AUTHORITIES IN THE AFORESAID CASES OF THE ASSESSEES HAVE TAKEN DIFFERENT VIEWS ON DIFFERENT REASONING WHICH CAN BE SUMMARISED IN THE FOLLOWING MANNER: A. AQUA BISLERI LD. PARTICULARS TREATMENT AS PER RETURN OF INCOME CAPITAL RECEIPT NOT TAXABLE AS PER ASSESSMENT ORDER LONG TERM CAPITAL GAIN ON E NTIRE ` 32 CRORES ON SUBSTANTIVE BASIS. AS PER CIT(A)S ORDER ADDITION DELETED B. PARLE SOFT DRINKS PVT. LTD. PARTICULARS TREATMENT AS PER RETURN OF INCOME CAPITAL RECEIPT NOT TAXABLE AS PER ASSESSMENT ORDER SHORT TERM CAPITAL GAIN ON ` 16 CRORES ON SUBSTANTIVE BASIS AND ALSO AS INCOME FROM OTHER SOURCES. AS PER CIT(A)S ORDER LONG TERM CAPITAL GAIN ON ENT IRE ` 16 CRORES ON SUBSTANTIVE BASIS. PARLE SOFT DRINKS PVT. LTD., ETC. 19 C. PARLE BOTTLING PVT. LTD. (NOW KNOWN AS PARLE INT ERNATIONAL PVT. LTD.) PARTICULARS TREATMENT AS PER RETURN OF INCOME CAPITAL RECEIPT NOT TAXABLE AS PER ASSESSMENT ORDER LONG TERM CAPITAL GAIN ON ` 16 CRORES ON PROTECTIVE BASIS. AS PER CIT(A)S ORDER CASUAL INCOME U/S 10(3) OF TH E ACT. 16. IN THE WAKE OF THE ABOVE BACKGROUND, WE HAVE HEARD THE LEARNED SENIOR COUNSEL, MR. SOLI DASTUR, WHO HAS REPRESENTE D THE CASE OF PARLE SOFT DRINKS PVT. LTD. AND ACQUA BISLERI LTD., AND THE LE ARNED SENIOR COUNSEL, MR. FIROZE ANDHYARUJINA HAS REPRESENTED THE CASE OF PAR LE BOTTLING PVT. LTD., WHEREAS THE LEARNED SPECIAL COUNSEL, DR. P. DANIEL, REPRESENTED THE REVENUE IN ALL THE THREE CASES. THE LEARNED SENIOR COUNSEL, MR. DASTUR, AFTER EXPLAINING THE ENTIRE FACTS WHICH HAVE BEEN INCORPO RATED IN SUMMARIZED MANNER BY US ABOVE, SUBMITTED THAT IN CASE OF PARLE SOFT DRINKS PVT. LTD., THE ASSESSING OFFICER HAS, FIRST OF ALL, HELD THAT IN TERMS OF MASTER AGREEMENT IN EXHIBITJ, ROFR WAS VESTED WITH LFFL AND THERE W AS NO SPECIFIC MENTION ABOUT THE ASSESSEE COMPANY AND NO EVIDENCE HAS BEEN BROUGHT ON RECORD THAT ROFR WAS IN TURN ASSIGNED BY LFFL TO THE ASSES SEE WITH THE CONSENT OF THE COCA COLA LTD. IN THIS REGARD, HE SUBMITTED THA T IN THE MASTER AGREEMENT ITSELF, THERE WAS A CLEAR CUT CONTEMPLATI ON OF FORMATION OF BANGALORE SUBSIDIARY IN THE MASTER AGREEMENT. NOT O NLY THIS, HOW THE PARLE SOFT DRINKS PVT. LTD., ETC. 20 BANGALORE SUBSIDIARY WAS TO BE FORMED WAS ALSO MENT IONED. HE REFERRED TO THE RELEVANT DEFINITION CLAUSES AS GIVEN IN ARTICLE 1 AND ALSO EXHIBITL WHICH LAID DOWN THE CONDITIONS FOR ASSIGNING THE BOTTLING RIGHTS ONLY TO SUCH BANGALORE SUBSIDIARY, WHICH WAS TO BE INITIALLY FOR MED BY LFFL OR OTHER ENTITIES OF PARLE GROUP AND LATER ON THE COCA COLA CO. WAS TO SUBSCRIBE 30% OF THE SHARES. IT WAS THIS SUBSIDIARY COMPANY, WHIC H WAS TO BE ASSIGNED THE BOTTLING RIGHTS FOR THE TERRITORY OF BANGALORE. IN SUPPORT, HE ALSO POINTED OUT THE RELEVANT TERMS AS GIVEN IN EXHIBITL. THIS BANG ALORE SUBSIDIARY COMPANY WAS PARLE SOFT DRINKS (BANGALORE) PVT. LTD. ONLY AN D HE FURTHER EXPLAINED AS TO HOW THIS COMPANY HAD COME INTO EXISTENCE SOLELY FOR THIS PURPOSE. HE SUBMITTED BEFORE US A SEQUENCE OF EVENTS TO SHOW AS TO HOW THIS COMPANY HAVE COME INTO EXISTENCE AND HAS RECEIVED THE COMPE NSATION FROM TCCC, WHICH, FOR THE SAKE OF READY REFERENCE, IS REPRODUC ED BELOW: DATE PARTICULARS 18 OCTOBER 1991 INCORPORATED AS GENERAL KNITWEAR EX PORTS PVT. LTD. 24 TH JUNE 1993 LIMCA FLAVOURS AND FRAGRANCES LTD. ENTER ED INTO MOU TO ACQUIRE GENERAL KNITWEAR EXPORTS PVT. LTD. (DATE WRONGLY MENTIONED AS 1 ST JULY 1993 BY AO) THROUGH PARLE INTERNATIONAL LTD. AND GOLDEN AGRO PRODUCTS LTD. (NOW BISLERI SALES LTD.) 3 JULY 1993 100% SHARES OF GENERAL KNITWEAR TRANSFERRED TO PANE INTERNATIONAL LTD AND GOLDEN AGRO PRODUCTS LTD (NOW BISLERI SALES LTD.) SHRI R.N.MUNGALE AND SHRI S.K. MOTANI APPOINTED AS DIRECTORS OF INCORPORATED AS GENERAL KNITWEAR EXPORTS P. LTD. 18 SEPTEMBER 1993 MASTER AGREEMENT (MA) BETWEEN PARLE GROUP AND THE COCA COLA COMPANY (TCCC) GRANTING RIGHT OF FIRST REFUSAL (ROFR) TO LIMCA FLAVOURS AND FRAGRANCES LIMITED 11 NOVEMBER 1993 EXECUTION OF EXHIBIT J I.E. LETTER FOR ASSIGNMENT O F ROFR TO LIMCA FLAVOURS AND FRAGRANCES LIMITED MAY/JUNE 1994 DRAFT BUSINESS PLAN FOR BANGALORE TER RITORY SUBMITTED BY PARLE SOFTDRINKS PRIVATE LIMITED TO PARLE SOFT DRINKS PVT. LTD., ETC. 21 TCCC (REFER LETTER DATED 21 JULY 1997 FROM TCCC WHICH MENTIONS THE SAME). 9 MAY 1994 RESOLUTION PASSED TO RENAME GKEPL AS PARLE SOFTDRINKS (BANGALORE) PVT LTD 10 OCTOBER 1994 NAME OF GENERAL KNITWEAR EXPORTS PRIVATE LIMITED CHANGED TO PARLE SOFT DNINKS (BANGALORE) PVT LTD 21 JULY 1997 LETTER FROM TCCC TO SETTLE BANGALORE BOTTLING RIGHTS DISPUTE AT USD 4.5 MILLION 28 JULY 1997 CERTIFICATE OF INWARD REMITTANCE OF USD 4.5 MILLION I.E. INR 16.05 CRORES 17. THEREAFTER, FROM THE RECORD, MR. DASTUR, POINTED OU T AS TO HOW A COMPANY OTHER THAN LFFL WOULD BE AWARDED THE BANGAL ORE TERRITORY FOR THE PURPOSE OF ROFR. FIRST OF ALL, IT IS EVIDENT FROM T HE DEFINITION CLAUSE GIVEN IN THE MASTER AGREEMENT, WHICH DEFINES BANGALORE INVES TMENT AGREEMENT AND BANGALORE SUBSIDIARY, THE EXHIBITE OF THE MASTER A GREEMENT GIVES THE RECITAL OF THE BOTTLING INVESTMENT COMPANY SHAREHOL DERS AGREEMENT AND THE SUBSCRIPTION TO THE SHARE CAPITAL AND CAPITALIZATIO N. THEREAFTER, HE REFERRED TO THE EXHIBITL AS TO HOW THERE WOULD BE A FORMATION OF BANGALORE SUBSIDIARY. THUS, THE VIEW OF THE ASSESSING OFFICER THAT ROFR W AS ONLY MEANT FOR LFFL IS WHOLLY ERRONEOUS. NOT ONLY THIS, THE TCCC ALSO RECO GNISED PARLE SOFT DRINKS PVT. LTD. IS A RIGHTFUL ENTITY, WHICH SHOULD RECEIV E THE AMOUNT. THIS ASPECT HAS ALSO BEEN ACCEPTED BY THE LEARNED COMMISSIONER (APPEALS). 18. REGARDING THE ASSESSING OFFICERS CONTENTION ON THE AMOUNT RECEIVED TOWARDS SETTLEMENT OF DISPUTE OF ROFR BEING A REVEN UE RECEIPT, HE SUBMITTED THAT AS PER THE TERMS AND CONDITIONS OF ROFR WHICH HAS BEEN EXPLAINED IN EXHIBITJ, THE ROFR CONSTITUTED A SUBSTANTIAL RIGHT AND FOUNDATION UPON PARLE SOFT DRINKS PVT. LTD., ETC. 22 WHICH THE ASSESSEE COULD HAVE BUILT ITS BOTTLING BU SINESS. BECAUSE IT IS FOR THE BOTTLING BUSINESS ONLY THAT THE SAID COMPANY WA S FORMED IN TERMS OF MASTER AGREEMENT AS STATED ABOVE. THE BOTTLING RIGH TS IF GRANTED WOULD HAVE BEEN THE SOURCE OF INCOME AND AS SUCH PROFIT MAKING APPARATUS FOR THE PARLE SOFT DRINKS PVT. LTD. THE VERY BASIC RIGHT FOR STAR TING THE BOTTLING BUSINESS WAS TAKEN AWAY, ONCE THE COCA COLA CO. VIOLATED THE TERMS OF AGREEMENT OF ROFR. THE VERY FOUNDATION ON WHICH THE COMPANY WAS FOUND WAS TAKEN AWAY AND, THEREFORE, THE AMOUNT WHICH WAS RECEIVED, IS NOTHING BUT COMPENSATION FOR LOSSES OF POTENTIAL SOURCE OF INCO ME VIZ. BOTTLING OPERATIONS IN BANGALORE TERRITORY. IN SUPPORT OF HIS CONTENTIO N, HE, FIRST OF ALL, RELIED UPON THE JUDGMENTS OF HON'BLE SUPREME COURT IN CIT V/S VAZIR SULTAN, [1995] 36 ITR 175 (SC) AND OBEROI HOTELS PVT. LTD. V/S CIT, [1999] 236 ITR 903 (SC). 19. REGARDING THE LEARNED COMMISSIONER (APPEALS)S FIND ING THAT THERE WAS A TRANSFER OF A CAPITAL ASSET WITHIN THE MEANING OF SECTION 45 AND IT IS A LONG TERM CAPITAL GAIN, HE SUBMITTED THAT FOR ATTRACTING THE PROVISIONS OF SECTION 45, THE VERY PREMISE OF THE TRANSFER OF CAPITAL ASS ET, IS LACKING COMPLETELY IN THE PRESENT CASE. THIS IS A CASE, WHERE THERE HAS B EEN A BREACH OF CONTRACT AND THE AMOUNT WAS RECEIVED AS DAMAGES FOR NOT CARR YING OUT THE OBLIGATION. IT WAS NOT FOR ANY TRANSFER OF CAPITAL ASSET. THUS, HERE IS THE CASE, WHERE THERE IS A BREACH OF CONTRACT AND ANY COMPENSATION RECEIVED ON SUCH A BREACH, IS A CAPITAL RECEIPT AND NOT RECEIPT ON ACC OUNT OF ANY TRANSFER OF CAPITAL ASSET. HE ALSO PLACED RELIANCE ON THE DECIS ION OF THE HON'BLE SUPREME PARLE SOFT DRINKS PVT. LTD., ETC. 23 COURT IN CIT V/S SHANTILAL, [1983] 144 ITR 57 (SC) AND SUBMITTED THAT THIS DECISION OF THE HON'BLE SUPREME COURT HAS BEEN FOLL OWED BY THE BOMBAY HIGH COURT ALSO IN CIT V/S JAYDWAR TEXTILES, [1993] 202 ITR 569 (BOM.). HE FURTHER ELABORATED THAT THE BREACH OF CONTRACT IS A T BEST, MERE RIGHT TO SUE AND SUCH A RIGHT CANNOT COME WITHIN THE AMBIT OF CA PITAL ASSET. IN SUPPORT OF THIS CONTENTION, HE RELIED UPON THE DECISION OF BOM BAY HIGH COURT IN CIT V/S ABHASBHOY A. DEHGAMWALLA, [1992] 195 ITR 28 (BOM.). 20. ALTERNATIVELY, HE SUBMITTED THAT IF ROFR IS TREATED AS A PROPERTY OR ANY KIND OF AN ASSET, THEN SUCH AN ASSET DOES NOT HAVE ANY COST OF ACQUISITION WHICH CAN BE ASCERTAINED AND, THEREFORE, IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN B.C. SRINIVASA SETTY (SUPRA), SUCH A TRANSFER CANNOT BE BROUGHT TO TAX. COMING TO THE LEARNED COMMISSIONER S FINDINGS THAT THE COST OF ACQUISITION IS TO BE TAKEN AS NIL IN VIEW OF THE PROVISIONS OF SECTION 55(2), HE SUBMITTED THAT FIRST OF ALL, ROFR DID NOT REPRESENT RIGHT TO MANUFACTURE, PRODUCE OR PROCESS ANY ARTICLE OR THIN G. THE COCA COLA CO., DID NOT GIVE ANY RIGHT TO MANUFACTURE TO THE ASSESSEE. THE ROFR ONLY PROVIDED THAT THE ASSESSEE COMPANY CAN ESTABLISH A BOTTLING UNIT FOR THE PURPOSE OF BUSINESS WITH THE COCA COLA CO. THE ROFR IS JUST A PRELUDE TO GRANT OF SUCH RIGHT. BY THE GRANT OF ROFR, THE ASSESSEE WAS NOT A UTOMATICALLY GRANTED ANY RIGHT TO MANUFACTURE. IT MERELY CONNOTES PREFERENTI AL OPPORTUNITY TO PROVE ITS WORTHY OF GRANT OF FULL-FLEDGED MANUFACTURING RIGHT . THERE IS NO TRANSFER OF INTANGIBLE ASSET LIKE PATENT, TRADEMARK, KNOWHOW, E TC. THUS, ROFR DOES NOT REPRESENT RIGHT TO MANUFACTURE, PRODUCE OR PROCESS ANY ARTICLE OR THING AND IT PARLE SOFT DRINKS PVT. LTD., ETC. 24 IS OUTSIDE THE PURVIEW OF SECTION 55(2) ALSO. AS RE GARDS THE EXPRESSION USED IN SECTION 55(2)(A), RIGHT TO CARRY ON BUSINESS H E SUBMITTED THAT IT WILL NOT BE APPLICABLE MAINLY ON THE GROUND THAT SUCH AN EXP RESSION HAS BEEN BROUGHT IN THE STATUTE W.E.F 1 ST APRIL 2003 I.E., FROM THE ASSESSMENT YEAR 200304. IN SUPPORT OF HIS AFORESAID CONTENTION, TH E LEARNED SR. COUNSEL HAS HEAVILY RELIED UPON THE DECISION OF HYDERABAD SPECI AL BENCH OF THE TRIBUNAL IN ACIT V/S DR. B.V. RAJU (DECEASED), [2012] 714 (T RIB.) 387 (HYD.). THUS, EVEN THE CAPITAL GAIN CANNOT BE CHARGED ON SUCH REC EIPTS. ALTERNATIVELY AND WITHOUT PREJUDICE, HE SUBMITTED THAT ALREADY THE AS SESSING OFFICER HAS TAXED THE SAID AMOUNT AS CAPITAL GAIN ON SUBSTANTIVE BASIS IN CASE OF AQUA BISLERI LTD. (LFFL), THEREFORE, THE SAME SHOULD BE DELETED FROM HERE AS THERE CANNOT BE DOUBLE TRANSACTION. 21. FOR THE SAKE OF CONTINUITY, WE ARE ALSO REFERRING T O THE ARGUMENTS PLACED BY LEARNED SENIOR COUNSEL, MR. FIROZE ANDHYA RUJINA, WHO HAS ARGUED THE CASE OF PARLE BOTTLING PVT. LTD., WHEREIN THE A SSESSING OFFICER HAS TREATED THE RECEIPT TO BE TAXED AS LONG TERM CAPITAL GAIN O N PROTECTIVE BASIS AND THE LEARNED COMMISSIONER (APPEALS) HAS TREATED THE SAME RECEIPT TO BE TAXED AS CASUAL AND NONRECURRING TAXABLE INCOME UNDER SECTI ON 10(3) ON SUBSTITUTIVE BASIS. THE LEARNED SENIOR COUNSEL SUBMITTED THAT IN THIS CASE ALSO, THE ASSESSEE HAS RECEIVED AN AMOUNT OF ` 16,05,60,000, AS COMPENSATION FROM THE COCA COLA CO. FOR BREACH OF ROFR AGREEMENT WITH REGARD TO BOTTLING RIGHTS OF PUNE TERRITORY. THE ASSESSING OFFICER SOL ELY RELIED UPON THE OBSERVATIONS AND THE FINDINGS GIVEN IN THE ASSESSME NT ORDER DATED 30 TH PARLE SOFT DRINKS PVT. LTD., ETC. 25 MARCH 2001, IN CASE OF AQUA BISLERI LTD., WHEREIN T HE ENTIRE RECEIPT HAVE BEEN TAXED ON SUBSTANTIVE BASIS UNDER THE HEAD LONG TERM CAPITAL GAIN. 22. BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ENTI RE FACTS WERE NARRATED AND THEY ARE EXACTLY SIMILAR TO THE CASE O F PARLE SOFT DRINKS PVT. LTD., EXCEPT FOR THE FACT THAT IN THE PRESENT CASE, THE ASSESSEE WAS ALREADY IN THE BOTTLING BUSINESS FOR PARLE GROUP OF COMPANIES. EARLIER, THE BOTTLING BUSINESS WAS DONE IN THE NAME AND STYLE OF THUMS UP BEVERAGES LTD. WHICH WAS LATER ON CHANGED TO PARLE BOTTLING LTD. H ERE ALSO, AS PER THE ROFR, THE ASSESSEE WAS TO CARRY ON THE BUSINESS OF BOTTLI NG FOR THE COCA COLA CO. FOR THIS PURPOSE, THE ASSESSEE SUBMITTED A DETAIL B USINESS PLAN TO THE COCA COLA CO. FOR CARRYING ON SUCH BUSINESS. HOWEVER, TH E COCA COLA CO. WITHOUT ANY SPECIFIC REASON REJECTED SUCH BUSINESS PLAN. A COPY OF CORRESPONDENCE BETWEEN THE ASSESSEE PARLE BOTTLING LTD. AND THE CO CA COLA CO., WAS ALSO SHOWN TO US WHICH ARE FORMING PART OF THE PAPER BOO K. AFTER THE BREACH OF ROFR, THE ASSESSEE, AFTER NEGOTIATION, RECEIVED COM PENSATION OF ` 16,05,60,000, WHICH WAS SHOWN AS NONTAXABLE CAPITA L RECEIPT. 23. LEARNED SENIOR COUNSEL SUBMITTED THAT BY BREACH OF SUCH A ROFR, THE COCA COLA CO. HAS DEPRIVED THE ASSESSEE OF POTENTIA L RIGHT. THE PLANS WHICH WERE SUBMITTED TO THE COCA COLA CO. WERE NOT HONOUR ED AND, HENCE, THE COMPENSATION IS GIVEN. THERE WAS A CLEAR CUT BREACH OF CONTRACTS GIVING RISE TO DAMAGES FOR SETTINGUP OF OR CARRYING OF BOTTLIN G PLANT. THUS, THE AMOUNT RECEIVED ON ACCOUNT OF FAILURE TO HONOUR THE COMMIT MENT BY THE COCA COLA PARLE SOFT DRINKS PVT. LTD., ETC. 26 CO. IS CAPITAL IN NATURE. THE BASIC SUBSTRATUM WAS DESTROYED IN THE CASE OF ASS BY THE COCA COLA CO. AND THE POTENTIAL SOURCE O F INCOME HAS BEEN LOST FOREVER. IN VIEW OF THE JUDGMENT OF HON'BLE SUPREME COURT IN OBEROI HOTELS PVT. LTD. (SC), SUCH A RECEIPT CANNOT BE TAXED AS R EVENUE RECEIPT OR CASUAL INCOME. IT ALSO CANNOT BE TAXED AS CAPITAL GAIN, BE CAUSE THERE IS NO ASSET IN EXISTENCE, TANGLE OR INTANGIBLE AND, HENCE, THERE I S NO EXTINGUISHMENT OF ANY ASSET OR THERE IS ANY TRANSFER OF CAPITAL ASSET. TH EREFORE, NOTHING IS TAXABLE. ON THE ISSUE OF CHARGEABILITY OF CAPITAL GAIN, HE T OOK THE SAME PLEA AS TAKEN BY THE LEARNED SENIOR COUNSEL MR. DASTUR, HENCE, FO R THE SAKE OF REPETITION, THE SAME ARE NOT STATED HERE. THE SUM AND SUBSTANCE IS THAT THERE IS NO COST OF ACQUISITION AND, HENCE, CANNOT BE TAXED AS CAPIT AL GAIN. 24. COMING TO THE FINDING OF THE LEARNED COMMISSIONER ( APPEALS) THAT THE AMOUNT RECEIVED IS IN THE NATURE OF CASUAL AND NON RECURRING RECEIPT, HE SUBMITTED THAT SUCH AN AMOUNT OF COMPENSATION CANNO T BE EQUATED WITH THE CASUAL RECEIPT WITHIN THE MEANING OF SECTION 10(3). TO FALL WITHIN THE AMBIT OF SECTION 10(3), FIRST IT HAS TO BE CHARACTERISED AS INCOME, WHICH HERE IN THIS CASE IS NOT. HE ALSO REFERRED TO CBDT CIRCULAR NO.1 58 DATED 27 TH DECEMBER 1974, AND RELIED UPON THE JUDGMENT OF HON'BLE SUPRE ME COURT IN RAMANATHAN CHETTIAR V/S CIT, [1967] 063 ITR 458 (SC ). HE FURTHER SUBMITTED THAT A CASUAL AND NON RECURRING RECEIPT C AN ONLY BE TAXED, ONCE THERE IS NO CLAIM OR RIGHT IN THE RECIPIENT TO EXPE CT ITS RECURRENCE. MERELY BECAUSE THE PAYMENT HAS BEEN MADE ONE TIME THAT WOU LD NOT LEAD TO INFERENCE THAT THE AMOUNT RECEIVED BY THE ASSESSEE WAS CASUAL OR NON PARLE SOFT DRINKS PVT. LTD., ETC. 27 RECURRING. IN THE PRESENT CASE, THERE WAS A VIOLATI ON OF ROFR AGREEMENT. IT WAS ON SUCH A BREACH THAT THE ASSESSEE HAD A RIGHT TO BE COMPENSATED BY THE VIOLATING PARTY. THUS, DEFINITELY, IT CANNOT BE HELD AS CASUAL OR NON RECURRING RECEIPT. IN SUPPORT OF HIS ARGUMENT, HE H AS ALSO RELIED UPON THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN MEHBOOB PR ODUCTIONS PVT. LTD. V/S CIT, [1977) 106 ITR 758 (BOM.). HE HAS ALSO REBUTTE D EACH AND EVERY FINDING OF THE LEARNED COMMISSIONER (APPEALS) GIVEN IN THIS REGARD BEFORE US. 25. PER CONTRA, THE LEARNED SPECIAL COUNSEL, DR. P. DAN IEL, ON BEHALF OF THE REVENUE, SUBMITTED THAT ALL THE TERMS AND AGREEMENT IN THE MASTER AGREEMENT WAS WITH LFFL WHICH IS EVIDENT FROM VARIO US CLAUSES APPEARING IN THE MASTER AGREEMENT. IN THIS AGREEMENT THERE IS NO SUCH CLAUSE FOR MAKING A NEW COMPANY AND ALL THE OTHER SCHEDULES AND EXHIB ITS WHICH WERE PART OF THE MASTER AGREEMENT HAVE NOT BEEN EXECUTED AND, TH EREFORE, IT HAS NO VALUE. THE BANGALORE SUBSIDIARY IS ONLY MENTIONED I N THE DEFINITION CLAUSE, HOWEVER, EXHIBITE WHICH DEALS IN DETAIL IN THIS RE GARD HAS NOT BEEN EXECUTED. HE READ THE RELEVANT CLAUSES OF THE AGREE MENT IN SUPPORT OF HIS CONTENTION. HE SUBMITTED THAT ONCE PERMISSION WAS G RANTED TO LFFL AND NOBODY ELSE THEN SUCH A ROFR WAS ONLY MEANT FOR LFF L ONLY. HE REFERRED TO VARIOUS OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER FOR PARLE SOFT DRINKS PVT. LTD. AND HEAVILY RELIED UPON THEM. HE ALSO SUBMITTED THAT THE LEARNED COMMISSIONER (APPEALS) H AS ALSO NOT MENTIONED THE FACTS AS DISCUSSED BY THE ASSESSING OFFICER. TH ERE IS NO CONCRETE EVIDENCE FOR TERMINATION OF THE AGREEMENT, THEREFOR E, THE AMOUNT RECEIVED IS PARLE SOFT DRINKS PVT. LTD., ETC. 28 NOT IN VIOLATION OF AGREEMENT BUT ONLY A CASUAL AND NON RECURRING RECEIPT WHICH IS NOTHING ELSE, BUT REVENUE RECEIPT, TAXABLE IN THE HANDS OF THESE ASSESSEES. HE ALSO STRONGLY RELIED UPON THE FINDING GIVEN BY THE LEARNED COMMISSIONER (APPEALS) AS GIVEN IN CASE OF PARLE SO FT DRINKS PVT. LTD. AND READ OUT VARIOUS PARAGRAPHS AND OBSERVATIONS MADE I N THE APPELLATE ORDER. HE HAS ALSO TRIED TO DISTINGUISHED VARIOUS CASE LAW S RELIED UPON BY THE LEARNED SENIOR COUNSEL AND ALSO REFERRED TO THE DEC ISION OF THE HON'BLE SUPREME COURT IN KETTLEWELL BULLEN AND CO. LTD. V/S CIT, [1964] 053 ITR 261 (SC). THUS, THE AMOUNT RECEIVED BY THE ASSESSEES CANNOT B E TAXED EITHER AS CAPITAL GAIN OR CAN BE TREATED AS CAPITAL RECEIPT. HIS ARGUMENTS CAN BE SUMMARISED IN THE FOLLOWING MANNER: (I) THE MASTER AGREEMENT DOES NOT REFER TO THIRD PARTY AND ROFR AGREEMENT WAS ONLY TO BE GIVEN TO LIMCA I.E., LFFL; (II) THERE IS NO MENTION OF RIGHT GIVEN TO ANY OTHER COM PANY; (III) EXCEPT FOR TRANSFER OF MONEY TO THE RESPECTIVE ASSE SSEES VIZ. PARLE SOFT DRINKS PVT. LTD. AND PARLE BOTTLING LTD., THERE IS NO DOCUMENT THAT ROFR WAS GIVEN TO THE OTHER PAR TIES; AND (IV) THE RIGHT GIVEN TO ONE LIMITED COMPANY CANNOT BE GI VEN TO OTHER LIMITED COMPANY, WITHOUT ANY DOCUMENT OR TRAN SFER PARLE SOFT DRINKS PVT. LTD., ETC. 29 AND IN THE PRESENT CASE THERE IS NO SUCH DOCUMENT F OR TRANSFER OF ASSIGNING OF RIGHTS BY LFFL TO THESE CO MPANIES; 26. HE FURTHER SUBMITTED THAT THE LEARNED COMMISSIONER (APPEALS), IN CASE OF PARLE SOFT DRINKS PVT. LTD. HAS GONE BY THE FACT THAT THE ASSESSING OFFICER HAS NOT PROVED THE NEGATIVE AND, THEREFORE, THE ASS ESSING OFFICERS FINDING IS NOT CORRECT IS A WRONG CONCLUSION; 27. LASTLY, HE CONCLUDED THAT THE AMOUNT RECEIVED HAS T O BE TAXED AS REVENUE RECEIPT IN THE HANDS OF THE LFFL OR ALTERNA TIVELY IN THE HANDS OF OTHER ASSESSEE IF IT IS HELD THAT THERE WAS NO RIGH T TO LFFL BY THE ROFR AGREEMENT. 28. IN THE REJOINDER, THE LEARNED SENIOR COUNSEL, MR. D ASTUR, SUBMITTED THAT FIRST OFF ALL, THE REVENUE HAS TO TAKE A CLEAR STAND AS TO IN WHICH HANDS, THESE RECEIPTS ARE TO BE TAXED AND UNDER WHICH HEAD . IF THE ARGUMENT OF THE LEARNED SPECIAL COUNSEL IS ACCEPTED, THEN THE ADDIT IONS MADE IN THE HANDS OF PARLE SOFT DRINKS PVT. LTD. AND PARLE BOTTLING PVT. LTD. SHOULD BE DELETED. IN CASE OF LFFL, THE AMOUNT HAS ALREADY BEEN TAXED AS CAPITAL GAIN ON SUBSTANTIVE BASIS, THEREFORE, ALL THESE PLEAS, WHET HER SUCH AN AMOUNT CAN BE TAXED AS CAPITAL GAIN OR NOT CAN BE DISCUSSED IN TH AT CASE ONLY I.E., AQUA BISLERI LTD. (LFFL) AND NOT IN THESE CASES. 29. REGARDING THE MAIN ARGUMENTS TAKEN BY THE LEARNED S PECIAL COUNSEL, MR. DASTUR, SUBMITTED THAT, FIRSTLY, THESE EXHIBITS E, J AND L, WERE PART OF PARLE SOFT DRINKS PVT. LTD., ETC. 30 THE AGREEMENT ITSELF AND THEY CANNOT BE READ AS SEP ARATE FROM THE AGREEMENT; SECONDLY, THE DEFINITION CLAUSE ITSELF P ROVIDED THAT THERE WOULD BE BANGALORE SUBSIDIARY COMPANY AND BANGALORE INVES TMENT AGREEMENT FOR THE PURPOSE OF SETTINGUP OF A COMPANY WHICH HAS BE EN SETFORTH IN ANNEXUREL AND ANNEXUREE. ONCE THE DEFINITION CLAU SE ITSELF PROVIDES AND MAKES A REFERENCE TO THESE EXHIBITS THEN, IT IS A P ART OF MASTER AGREEMENT. THE AGREEMENT HAS TO BE UNDERSTOOD IN THE TERMS UND ERSTOOD BY THE PARTIES WHICH HAVE ACTED UPON IT. IN THE AGREEMENT, ONE HAS TO SEE AS TO WHAT WAS THE INTENTION OF PARTIES AND HOW THEY HAVE UNDERSTO OD THE VARIOUS TERMS AND CONDITIONS. IF THE EXHIBITS OR ANY PART HAS NOT BEE N EXECUTED, THEN WHAT WAS THE NEED BY THE COCA COLA CO. TO PAY SUCH A HUGE CO MPENSATION. COMING TO THE ARGUMENTS THAT THE ROFR WAS ONLY MEANT FOR LFFL , HE SUBMITTED THAT IN THE AGREEMENT AS WELL AS IN THE EXHIBIT ITSELF, THE RE WAS CLEAR CUT STIPULATION OF FORMING OF A SUBSIDIARY COMPANY FOR THE PURPOSE OF CARRYING OUT BOTTLING ACTIVITIES FOR THE BANGALORE TERRITORY LFFL WAS NEV ER MEANT TO CARRY ON SUCH BOTTLING ACTIVITY ON ITS OWN, ONCE THE SUBSIDIARY W AS FORMED FOR CARRYING ON SUCH ACTIVITY, HENCE, THE AMOUNT RECEIVED BY WAY OF COMPENSATION FOR VIOLATION OF ROFR AGREEMENT WAS IN THE NATURE OF CA PITAL RECEIPT IN THE HANDS OF THESE TWO COMPANIES ONLY I.E., PARLE SOFT DRINKS PVT. LTD. AND PARLE BOTTLING LTD. MOREOVER, THE ACTION OF THE COCA COLA CO. CATEGORICALLY SPEAKS THAT THE PAYMENT WAS MADE TO THE ASSESSEE FOR THE B ANGALORE TERRITORY. AS REGARDS THE ISSUE OF CAPITAL GAINS, HE REITERATED T HAT NO ARGUMENT HAS BEEN PLACED ON BEHALF OF THE REVENUE, THIS, INTERALIA, MEANS THAT THE ISSUE OF PARLE SOFT DRINKS PVT. LTD., ETC. 31 CAPITAL GAIN IS NOT BEING CONTESTED BY THE REVENUE. IN ANY CASE, IT IS NEITHER THE CASE FOR TAXING THE AMOUNT UNDER THE HEAD CAPITAL GAIN NOR AS REVENUE RECEIPT OR CASUAL AND NON RECURRING RECEIPT . 30. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS, PERUSED THE RELEVANT FINDINGS GIVEN BY THE ASSESSING OFFICER AN D THE LEARNED COMMISSIONER (APPEALS) ON THIS ISSUE AS WELL AS THE MATERIAL PLACED ON RECORD. THE MAIN DISPUTE FOR OUR ADJUDICATION IS, W HETHER THE SUM OF ` `` ` 16,05,82,500, WHICH HAS BEEN RECEIVED BY THE ASSESS EE FROM THE COCA COLA CO., ON THE BREACH OF ROFR AGREEMENT, IS A CAPITAL RECEIPT NOT CHARGEABLE TO TAX OR TO BE TREATED AS REVENUE RECEIPT OR CASUAL I NCOME OR LONG TERM CAPITAL GAIN OR SHORT TERM CAPITAL GAIN AND FURTHER IN WHOS E HANDS IT SHOULD BE TAXED. AS ALREADY DISCUSSED ABOVE, VARIOUS AUTHORIT IES HAVE DISCUSSED AND DECIDED THIS ISSUE IN DIFFERENT MANNER AND ON DIFFE RENT INTERPRETATION OF THE SAME FACTS PLACED BEFORE THEM. INSOFAR AS THE FACTS WHICH HAVE BEEN NARRATED ABOVE, THERE IS NO DISPUTE. THE DISPUTE IS ONLY WITH REGARD TO THE INTERPRETATION AND THE TAXABILITY OF THE RECEIPT AN D UNDER WHICH HEAD. IN THE MAIN AGREEMENT WHICH HAS BEEN REFERRED AS MASTER AG REEMENT ENTERED BY THE VARIOUS SELLERS WHO ARE PARLE GROUP OF COMPANIE S WITH THE COCA COLA CO., THERE WAS A STIPULATION FOR ASSIGNMENT OF BOTT LING RIGHTS FOR THE BANGALORE TERRITORY AND PUNE TERRITORY. IN ORDER TO GIVE PRIORITY TO THE PARLE GROUP OF COMPANIES FOR THE BOTTLING RIGHTS, ROFR AG REEMENT WAS ENTERED, WHICH FLOWS FROM EXHIBITJ OF THE MASTER AGREEMENT. THE ROFR I.E., RIGHT OF FIRST REFUSAL, IS A CONTRACTUAL RIGHT THAT GIVES IT S HOLDER AN OPTION TO ENTER PARLE SOFT DRINKS PVT. LTD., ETC. 32 INTO A BUSINESS TRANSACTION WITH THE OWNER OF SOMET HING, BEFORE THE OWNER IS ENTITLED TO ENTER INTO A TRANSACTION WITH A THIRD P ARTY. IN LEGAL PARLANCE, IT IS A RIGHT GIVEN TO A PERSON TO BE FIRST ALLOW TO PURCHA SE A CERTAIN OBJECT IF EVER OFFERED FOR SALE. HERE, THE COCA COLA CO. GAVE THIS RIGHT TO THE PARLE GROUP OF COMPANIES FOR CARRYING OUT THE BOTTLING ACTIVITI ES IN THE SPECIFIED TERRITORIES. SUCH A ROFR WAS REACHED BY THE COCA CO LA CO. AND AFTER THE DISPUTE, COMPENSATION WAS SETTLED AMONG THE PARTIES WHICH HAS BEEN PAID TO THESE ASSESSEES. IN THE CASE BEFORE US I.E., IN CAS E OF PARLE SOFT DRINKS P. LTD., THE MAIN CONTROVERSY AS CULLED OUT BEFORE US IN THE COURSE OF ARGUMENT ARE:- (I) WHETHER PARLE SOFT DRINKS PVT. LTD. IS ACTUALLY ENT ITLED FOR RECEIVING THE COMPENSATION FROM THE COCA COLA CO; (II) WHETHER PARLE SOFT DRINKS PVT. LTD. WAS PARTY TO RO FR AGREEMENT WITH THE COCA COLA CO. OR LFFL IS THE RIG HTFUL ENTITY WHICH IS ENTITLED FOR RECEIVING THE COMPENSATION; (III) WHETHER THE ASSESSEE HAD NECESSARY INFRASTRUCTURE O R CAPABILITY OF CARRYING OUT BOTTLING ACTIVITIES, AS IT HAD NEITHER ANY PLANT AND MACHINERY NOR ANY BUSINESS SET UP AND, TH EREFORE, THERE IS NO LOSS OF TRADING STRUCTURE OR PROFIT MAK ING STRUCTURE, SO THE LOSS WAS NOT ON ACCOUNT OF CAPITAL FIELD AND TH E COMPENSATION RECEIVED IS NOT A CAPITAL RECEIPT BUT REVENUE RECEI PT; PARLE SOFT DRINKS PVT. LTD., ETC. 33 (IV) WHETHER THE AMOUNT RECEIVED IS TO BE TAXED AS LONG TERM CAPITAL GAIN OR SHORT TERM CAPITAL GAIN IF IT IS NO T A CAPITAL RECEIPT; AND (V) WHETHER THE AMOUNT CAN BE TAXED AS CASUAL AND NON- RECURRING RECEIPT. 31. FIRST OF ALL, AS PER THE TERMS OF MASTER AGREEMENT IN EXHIBITJ, ROFR WAS VESTED WITH LFFL TO CARRY OUT THE BOTTLING ACTI VITIES IN THE TERRITORY OF THE BANGALORE. IN THE MASTER AGREEMENT, THERE WAS A CLE AR INDICATION THAT THERE WOULD BE A FORMATION OF BANGALORE SUBSIDIARY AND TH ERE WOULD BE AN INVESTMENT AGREEMENT ALSO BETWEEN THE PARTIES FOR T HIS PURPOSE. THE EXHIBITJ PROVIDED THE NECESSARY GUIDELINES AS TO H OW THIS BANGALORE SUBSIDIARY WILL BE FORMED. FURTHER, THE EXHIBITL A LSO LAID DOWN VARIOUS ASSIGNMENTS OF THE BOTTLING RIGHTS, ONLY TO SUCH A NEWLY FORMED COMPANY WHICH WAS TO BE INITIALLY HELD AND FORMED BY PARLE GROUP AND LATER ON THE COCA COLA CO. WILL JOIN IN AFTER SUBSCRIBING 30% OF THE SHARES. IT WAS TO THIS SUBSIDIARY COMPANY THAT THE BOTTLING RIGHTS WERE TO BE GIVEN IN THE TERRITORY OF THE BANGALORE. THIS SUBSIDIARY COMPANY WAS FORME D AS PARLE SOFT DRINKS PVT. LTD. I.E., THE ASSESSEE AND THE MANNER AND SEQUENCE IN WHICH THIS COMPANY WAS FORMED HAS ALREADY BEEN DISCUSSED BY US IN THE FORGOING PARAGRAPHS. THUS, THE ASSESSEE COMPANY WAS FORMED O NLY FOR CARRYING OUT BOTTLING ACTIVITIES IN THE TERRITORY OF BANGALORE. HENCE, THERE CAN BE NO DISPUTE OR A QUESTION, THAT THE ASSESSEE WAS ENTITL ED FOR RECEIVING THE PARLE SOFT DRINKS PVT. LTD., ETC. 34 COMPENSATION AMOUNT ON THE BREACH OF ROFR FROM THE COCA COLA CO. THUS, EVEN THOUGH ROFR AGREEMENT WAS WITH LFFL BUT IT WAS ALWAYS AGREED UPON BY THE PARTIES TO THE AGREEMENT THAT THE SAME SHOUL D BE FOR A NEWLY FORMED ENTITY AS BANGALORE SUBSIDIARY COMPANY WHICH IS THE ASSESSEE COMPANY ONLY. THE AGREEMENT AS WELL AS THE ROFR PROVIDED THAT THE RIGHTS WERE GIVEN TO THE ASSESSEE FOR CARRYING OUT THE BOTTLING ACTIVITI ES FOR THE COCA COLA CO. FOR THE BANGALORE TERRITORY. IT IS FOR THE PURPOSE OF T HIS INTENDED BUSINESS THAT THE ASSESSEE COMPANY WAS FORMED IN TERMS OF ROFR AS GIVEN IN EXHIBITJ AND L. IT WAS NOT NECESSARY THAT THE ASSESSEE SHOUL D HAVE INSTALED THE ENTIRE PLANT AND MACHINERY FOR CARRYING OUT SUCH BUSINESS. THUS, THE ROFR ITSELF CONSTITUTED A SUBSTANTIAL RIGHT AND FOUNDATION ON W HICH THE ASSESSEE COULD HAVE BUILT ITS BOTTLING BUSINESS. IF SUCH RIGHT WOU LD HAVE BEEN ASSIGNED TO THE ASSESSEE THAT WOULD HAVE BEEN THE SOURCE OF ASS ESSEES INCOME AND PROFIT MAKING APPARATUS. THE ASSESSEE HAD ALSO SUBM ITTED ITS BUSINESS PLANS AND VARIOUS MODES FOR CARRYING OUT THE BOTTLING BUS INESS TO THE COCA COLA CO. THERE IS NO DISPUTE THAT THE COCA COLA CO. HAS BREACHED THE ROFR BY NOT ASSIGNING THESE RIGHTS AND IT WAS ON ACCOUNT OF SUCH A BREACH OF THE ROFR AGREEMENT, THAT THE COMPENSATION AMOUNT WAS SE TTLED BETWEEN THE PARTIES. THUS, IN THE CASE OF THE ASSESSEE, THE VER Y FUNDAMENTAL RIGHT FOR STARTING THE BOTTLING BUSINESS WAS TAKEN AWAY AS A RESULT OF BREACH OF ROFR BY THE COCA COLA CO. THAT IS THE REASON WHY THE COC A COLA CO. HAS PAID THIS AMOUNT TO THE ASSESSEE AND NOT TO THE LFFL. PARLE SOFT DRINKS PVT. LTD., ETC. 35 32. NOW, UNDER THESE CIRCUMSTANCES, WE HAVE TO EXAMINE WHETHER THIS COMPENSATION AMOUNT OF ` 16,05,82,500 IS CAPITAL RECEIPT OR REVENUE RECEIPT THAT IS WHETHER IT IS NONTAXABLE OR TAXABLE RECEIP T. ALL THE RECEIPTS IN THE HAND OF THE AN ASSESSEE WOULD NOT NECESSARILY BE IN COME OR DEEMED TO BE INCOME FOR THE PURPOSE OF INCOME TAX, BECAUSE IT WI LL DEPEND UPON THE NATURE OF THE RECEIPT AND THE TRUE SCOPE AND EFFECT OF THE RELEVANT TAXING PROVISIONS. THE HON'BLE SUPREME COURT IN KETTLEWEL BULLEN & CO. LTD. (SUPRA) HAVE OBSERVED THAT WHERE ON A CONSIDERATION OF THE CIRCUMSTANCES, PAYMENT IS MADE TO COMPENSATE A PERSON FOR CANCELLATION OF A CONTRACT WHICH DOES NOT AFFECT THE TRADING STRUCTURE OF HIS BUSINESS, NOR D EPRIVE HIM OF WHAT IS SUBSTANCE OF HIS SOURCE OF INCOME, TERMINATION OF T HE CONTRACT BEING A NORMAL INCIDENT OF THE BUSINESS, AND SUCH CANCELLAT ION LEAVES HIM FREE TO CARRY ON HIS TRADE THE RECEIPT IS REVENUE. HOWEVER, WHERE BY THE CANCELLATION OF AN AGENCY, THE TRADING STRUCTURE OF THE ASSESSEE ITSELF IS IMPAIRED OR SUCH CANCELLATION RESULTS INTO LOSS OF WHAT MAY BE REGAR DED AS THE SOURCE OF THE ASSESSEES INCOME, THE PAYMENT MADE TO COMPENSATE F OR CANCELLATION OF THE AGENCY AGREEMENT IS NORMALLY A CAPITAL RECEIPT. 33. THIS GUIDING PRINCIPLE OF THE HON'BLE SUPREME COURT HAS BEEN FOLLOWED TIME AND AGAIN NOT ONLY BY THE VARIOUS COURTS BUT A LSO BY THE HON'BLE SUPREME COURT ITSELF. IN CASE OF OBEROI HOTELS PVT. LTD. (SUPRA), THE HON'BLE SUPREME COURT HAS REITERATED THIS PRINCIPLE AND OPI NED THAT IF THE INJURY WAS INFLICTED ON THE CAPITAL ASSET OF THE ASSESSEE AND FOR GIVING UP THE CONTRACTUAL RIGHT ON THE BASIS OF PRINCIPAL AGREEMENT WHICH HAD RESULTED INTO LOSS OF PARLE SOFT DRINKS PVT. LTD., ETC. 36 SOURCE OF ASSESSEES INCOME THE RECEIPT IN THE HAND S OF THE ASSESSEE IS A CAPITAL RECEIPT. 34. IF WE APPLY THE SAID RATIO AND THE LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN THE PRESENT CASE, THEN, WHAT THE A SSESSEE HAS LOST, IS THE VERY SOURCE OF HIS BUSINESS AND LOSS OF A TRADING S TRUCTURE. IF THE RIGHT GIVEN BY THE ROFR WOULD HAVE CONTINUED, THE ASSESSEE WOUL D HAVE THE SOURCE OF INCOME FROM THE BOTTLING BUSINESS AND THIS WOULD HA VE CONSTITUTED ITS PROFIT MAKING APPARATUS. IT IS NOT A CASE THAT THERE WAS S OME BREACH OF AGREEMENT DURING THE COURSE OF CARRYING ON THE BUSINESS OR TR ADING ACTIVITY FOR WHICH THE ASSESSEE HAS RECEIVED ANY KIND OF COMPENSATION. HER E, EVEN BEFORE THE ASSESSEES ACTUAL BUSINESS COULD START, THERE WAS A BREACH BY THE OTHER PARTY WHICH ENDED UP THE SAID BUSINESS ITSELF. THUS, CLEA RLY THIS IS A CASE OF LOSS OF SOURCE OF INCOME ITSELF AND HENCE, THE COMPENSATION WHICH WAS RECEIVED BY THE ASSESSEE IS ON CAPITAL FIELD I.E., CAPITAL RECE IPT WHICH CANNOT BE TAXED UNDER THE INCOME LAWS. THIS CONCLUSION OF OURS CONC LUDES THE ENTIRE CONTROVERSY ON THIS SCORE. 35. NOW WE SHALL BRIEFLY DEAL, WHETHER SUCH A RECEIPT C OULD BE TAXED AS CASUAL AND NON RECURRING INCOME UNDER SECTION 10(3 ) AS HELD BY THE LEARNED COMMISSIONER (APPEALS) IN PARLE BOTTLING PVT. LTD. IF ANY RECEIPT WHICH IS TO BE TREATED AS CASUAL AND NON RECURRING NATURE, FIRS T OF ALL, THE RECEIPT HAS TO BE CHARACTERISED AS INCOME. IF IT IS NOT WITHIN THE MEANING OF THE TERM INCOME, THE SAME CANNOT BE TAXED UNDER SECTION 10(3 3). THIS HAS BEEN PARLE SOFT DRINKS PVT. LTD., ETC. 37 CLEARLY EXPLAINED BY THE CBDT VIDE CIRCULAR NO.158 DATED 27 TH DECEMBER 1974. IN THIS CASE, THE RECEIPT CANNOT BE SAID TO B E CASUAL BECAUSE IT HAS NOT BEEN INCURRED BY CHANCE OR BY FORTUITOUS. HERE, IT IS A CASE OF BREACH OF AN AGREEMENT AND THE AMOUNT HAS BEEN SETTLED AFTER A D ISPUTE AMONG THE PARTIES. THIS RECEIPT CANNOT BE TERMED AS NEITHER C ASUAL NOR NON RECURRING. IN ANY CASE, WE HAVE ALREADY HELD AS ABOVE THAT IT IS IN THE NATURE OF CAPITAL RECEIPT WHICH CANNOT BE TAXED IN THE HANDS OF THE A SSESSEE. HENCE, THIS ISSUE BECOMES PURELY ACADEMIC IN THIS CASE. 36. SUCH A RECEIPT ALSO CANNOT BE TAXED AS CAPITAL GAIN , FIRSTLY, THERE WAS NO TRANSFER OR EXTINGUISHMENT OF ANY RIGHTS. THE CO CA COLA CO. HAS NEVER PASSED ON ANY KIND OF A RIGHT TO THE ASSESSEE FOR M ANUFACTURE. THE COCA COLA CO. HAS MERELY AGREED UPON, THAT THE BOTTLING BUSINESS FOR THE TERRITORY OF BANGALORE WOULD BE DONE BY THE ASSESSEE. IN CASE , IF THE COCA COLA CO. DOES NOT FULFILL THE OBLIGATION FOR ALLOWING THE AS SESSEE TO CARRY OUT THE BOTTLING BUSINESS AND ASSIGNS THE SAME TO THE THIRD PARTY, THEN THERE WOULD BE A BREACH, FOR WHICH THE AMOUNT WOULD BE PAYABLE AS COMPENSATION. THE ROFR ONLY PROVIDES THE ASSESSEE CAN ESTABLISH A BOT TLING UNIT FOR THE PURPOSE OF BUSINESS WITH THE COCA COLA CO. AND SUCH A ROFR IS MERELY A PRELUDE TO GRANT SUCH A RIGHT. BY THE GRANT OF ROFR, THE ASSES SEE DOES NOT GET AUTOMATICALLY THE RIGHT TO MANUFACTURE. IT MERELY C ONNOTES PREFERENTIAL OPPORTUNITY TO PROVE ITS WORTHY OF GRANT OF FULLFL EDGED MANUFACTURING RIGHT. THERE IS NEITHER ANY TRANSFER OF INTANGIBLE ASSET L IKE PATENT, TRADEMARK, KNOWHOW, ETC., NOR ANY KIND OF ASSET. THUS, IT CANN OT BE A CASE OF TRANSFER OF PARLE SOFT DRINKS PVT. LTD., ETC. 38 AN ASSET AND, HENCE, CANNOT BE SUBJECT TO TAXATION UNDER THE HEAD CAPITAL GAIN ALSO. AS A RESULT OF OUR FINDING, THE GROUND N O.1, AS RAISED BY THE ASSESSEE IS TREATED AS ALLOWED, WHEREAS, GROUND NO. 1 AND 2, AS RAISED BY THE REVENUE ARE TREATED AS DISMISSED, AS THE ISSUE OF T AXABILITY OF THE AMOUNT RECEIVED BY THE ASSESSEE FROM THE COCA COLA CO. IS DECIDED IN FAVOUR OF THE ASSESSEE THAT IT IS NOT TAXABLE. 37. IN GROUND NO.2, THE ASSESSEE HAS CHALLENGED DISALLO WANCE OF HIGHER DEPRECIATION OF 40% IN RESPECT OF VEHICLE USED IN T HE BUSINESS OF HIRE. 38. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS D ISCLOSED HIRE CHARGES OF ` 6,18,900. THESE RECEIPTS HAVE BEEN RECEIVED FROM T HE TRUCKS / THREE WHEELERS WHICH WERE LEASED OUT BY THE ASSESSE E. THESE VEHICLES WERE PURCHASED DURING THE YEAR AND DEPRECIATION OF 40% W AS CLAIMED. IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE ASS ESSING OFFICER, IT WAS SUBMITTED THAT THE ASSESSEE WAS OWNER OF THESE VEHI CLES AND WERE USED FOR THE PURPOSE OF ITS BUSINESS I.E., FOR HIRING AND, T HEREFORE, DEPRECIATION HAS TO BE CLAIMED @ 40% , AS PRESCRIBED. THE ASSESSING OFFICER HELD THAT TH E VEHICLE SHOULD BE USED BY THE ASSESSEE FOR RUNNING THEM ON HIRE BY DIFFERENT PERSONS AND IT SHALL NECESSARILY BEAR THE EXPENDITU RE ON RUNNING AND MAINTENANCE, ETC. THUS, HIGHER RATE ON DEPRECIATION IS NOT ADMISSIBLE AS IT IS LEASED OUT. HENCE, HE ALLOWED ONLY 20% OF THE DEPRE CIATION AND ADMISSIBLE DEPRECIATION WAS ALLOWED TO THE EXTENT OF ` 5,75,645, IN STEAD OF ` 11,51,291. PARLE SOFT DRINKS PVT. LTD., ETC. 39 39. BEFORE THE LEARNED COMMISSIONER (APPEALS), DETAIL S UBMISSIONS WERE MADE WHICH HAVE BEEN REJECTED BY HIM HOLDING THAT I N ORDER TO BE ELIGIBLE FOR 40% DEPRECIATION, THE VEHICLE SHOULD BE USED BY THE ASSESSEE FOR RUNNING THEM ON HIRE AND IT SHOULD NECESSARILY BEAR THE EXP ENDITURE ON RUNNING AND MAINTENANCE, ETC. HE THUS UPHELD THE CONTENTION OF THE ASSESSING OFFICER. 40. BEFORE US, IT HAS BEEN SUBMITTED THAT NOW THIS ISSU E STANDS COVERED BY THE DECISION OF THE HON'BLE SUPREME COURT IN ICDS L TD. V/S CIT, [2013] 350 ITR 635 (SC), THAT HIGHER DEPRECIATION SHOULD BE AL LOWED ON THE VEHICLE LEASED OUT BY THE ASSESSEE BECAUSE THAT IT IS HIS B USINESS. THE LEARNED SPECIAL COUNSEL RELIED UPON THE ORDER OF THE LEARNE D COMMISSIONER (APPEALS). 41. AFTER CAREFULLY CONSIDERING THE RIVAL CONTENTIONS, WE ARE OF THE OPINION THAT ONCE IT IS NOT DISPUTED THAT THE ASSESSEE WAS THE OWNER OF THE VEHICLE AND ITS BUSINESS IS FOR HIRING AND LEASING OF VEHIC LES TO THE THIRD PARTIES, THE HIGHER RATE OF DEPRECIATION HAS TO BE ALLOWED. MORE OVER, AS POINTED OUT BY THE LEARNED COUNSEL BEFORE US THAT THIS ISSUE HAS B EEN DECIDED BY THE TRIBUNAL IN DELHI BOTTLING CO. LTD. IN ITA NO.6332/ MUM./2003, ORDER DATED 22 ND FEBRUARY 2007, WHEREIN, IDENTICAL ISSUE WAS DECIDE D IN FAVOUR OF THE ASSESSEE AFTER FOLLOWING THE DECISION OF DELHI HIGH COURT IN MGF INDIA LTD., 285 ITR 142 (DEL.). THE HON'BLE SUPREME COURT IN ID CS LTD. (SUPRA), HAS HELD THAT THERE IS NO REQUIREMENT THAT USAGE OF THE ASSET SHOULD BE BY THE ASSESSEE HIMSELF. IF THE VEHICLE HAS BEEN PURCHASED BY THE ASSESSEE AND PARLE SOFT DRINKS PVT. LTD., ETC. 40 LEASED OUT TO THE CUSTOMER THEN THE ASSESSEE IS THE OWNER OF THE VEHICLE AND IT IS ENTITLED FOR HIGHER RATE OF DEPRECIATION AS A PPLICABLE UNDER THE INCOME TAX RULES. THUS, THIS ISSUE IS SQUARELY COVERED BY THE JUDGMENT OF HON'BLE SUPREME COURT AND, HENCE, GROUND NO.2 IS RAISED BY THE ASSESSEE IS TREATED AS ALLOWED. 37. IN THE RESULT, ASSESSEES APPEAL ITA NO.5072/MU M./2001. IS TREATED AS ALLOWED. 42. WE NOW TAKE UP REVENUES APPEAL IN ITA NO.5284/MUM. /2001, VIDE WHICH, GROUND NO.3 AND 4, RELATE TO DISALLOWANCE OF ` 10,00,000 BEING PROFESSIONAL FEES PAID TO MR. R.M. MUNGALE DIRECTOR THE ASSESSEE COMPANY. 43. THE ASSESSEE HAS CLAIMED THAT A SUM OF ` 10 LAKHS WAS PAID TO MR. R.N. MUNGALE, TOWARDS PROFESSIONAL FEES IN CONNECTI ON WITH NEGOTIATION, DRAFTING AGREEMENTS AND FINALLY RECEIVING THE COMPE NSATION FROM THE COCA COLA CO. THE ASSESSING OFFICER HELD THAT THE COMMUN ICATION WAS BETWEEN THE COCA COLA CO. AND THE ASSESSEE AND MOREOVER MR. MUNGALE, IS ONE OF THE EMPLOYEES OF PARLE ASSOCIATED GROUP AND, THEREFORE, DOES NOT JUSTIFY THE PAYMENT OF PROFESSIONAL CHARGES TO HIM. 44. BEFORE US, THE ASSESSEE SUBMITTED A COPY OF BOARD R ESOLUTION APPROVING A PAYMENT OF ` 10 LAKHS TO MR. MUNGALE FOR THE SERVICES RENDERED DURING THE NEGOTIATING TRANSACTIONS WITH THE COCA C OLA CO. WHICH HAS RESULTED IN SETTLING THE DISPUTE. HE IS NEITHER REL ATED TO THE ASSESSEE NOR A PARLE SOFT DRINKS PVT. LTD., ETC. 41 SHAREHOLDER IN THE PARLE GROUP OF COMPANIES. THE LE ARNED COMMISSIONER (APPEALS) HELD THAT ON THESE FACTS, THE PROVISIONS OF SECTION 40A(2) DOES NOT ATTRACT AND MOREOVER PAYMENT OF SUCH PROFESSIONAL C HARGES HAS YIELDED ` 16.05 CRORES TO THE ASSESSEE FOR CARRYING OUT NEGOT IATE WITH THE COCA COLA CO. ACCORDINGLY, HE ALLOWED THE SAME IN FAVOUR OF T HE ASSESSEE. 45. BEFORE US, BOTH THE PARTIES RELIED UPON THE RESPECT IVE ORDERS. 46. AFTER CAREFULLY CONSIDERING THE SUBMISSIONS MADE BY THE PARTIES AND ALSO THE RELEVANT FINDINGS GIVEN BY THE ASSESSING O FFICER AS WELL AS THE LEARNED COMMISSIONER (APPEALS), IT IS SEEN THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY REASON AS TO WHY SUCH A PROFESSIONAL FEES PAID TO THE SAID PERSON WAS EXCESSIVE. ONCE IT HAS NOT BEEN DISPUTED THAT H E WAS A PERSON WHO WAS INSTRUMENTAL IN CARRYING OUT THE NEGOTIATION WITH T HE COCA COLA CO. FOR SETTLING THE DISPUTE AND FOR AWARDING THE COMPENSAT ION, SUCH AN EXPENDITURE HAS TO BE ALLOWED AS BUSINESS EXPENDITURE AND NO DI SALLOWANCE CAN BE MADE. ACCORDINGLY, GROUND NO.3 AND 4, AS RAISED BY THE RE VENUE ARE TREATED AS DISMISSED. 47. IN GROUND NO.5, THE REVENUE HAS CHALLENGED THAT THE NET COMPENSATION OF ` 15,95,82,500, RECEIVED FROM THE COCA COLA CO. IS A LONG TERM CAPITAL GAIN, HENCE, IT DOES CONSTITUTE BOOK PROFIT UNDER S ECTION 115JA. 48. SINCE WE HAVE ALREADY DECIDED THE ISSUE IN FAVOUR O F THE ASSESSEE THAT THE AMOUNT RECEIVED BY THE ASSESSEE IS NOT A CAPITA L GAIN BUT A CAPITAL PARLE SOFT DRINKS PVT. LTD., ETC. 42 RECEIPT, WHICH IS NOT TAXABLE AND, HENCE, SUCH A GR OUND BECOMES PURELY ACADEMIC. 49. IN GROUND NO.6, THE REVENUE HAS CHALLENGED THE DIRE CTION OF THE LEARNED COMMISSIONER (APPEALS) TO THE ASSESSING OFF ICER TO RECOMPUTE THE INTEREST UNDER SECTION 234B ON THE RETURNED INCOME INSTEAD OF THE ASSESSED INCOME. 50. AS ADMITTED BY BOTH THE PARTIES, THIS ISSUE IS CONS EQUENTIAL AND HAS TO BE ON ASSESSED INCOME. IN THE RESULT, REVENUES APPEAL IN ITA NO.5284/MUM ./2001, IS TREATED AS DISMISSED. WE NOW TAKE UP ASSESSEES CROSS OBJECTION NO.136/MU M./2002. 51. THE ASSESSEE HAS CHALLENGED THAT THE LEARNED COMMIS SIONER (APPEALS) OUGHT TO HAVE HELD THAT THE RECEIPT OF ` 16.95 CRORES DO NOT FORM PART OF THE BOOK PROFIT. 52. SINCE WE HAVE ALREADY HELD THAT THE AMOUNT IN QUEST ION IS NOT TAXABLE, THE PROVISIONS UNDER SECTION 115JA WILL NOT BE APPL ICABLE TO THE FACTS OF THE PRESENT CASE. THUS, FOR STATISTICAL PURPOSES, THE A SSESSEES CROSS OBJECTION IS TREATED AS ALLOWED. PARLE SOFT DRINKS PVT. LTD., ETC. 43 53. IN THE RESULT, ASSESSEES CROSS OBJECTION NO.13 6/MUM./2002 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. WE NOW TAKE UP ASSESSEES APPEAL IN ITA NO.825/MUM. /2003. 54. GROUND NO.1, 2 AND 8, RELATE TO ISSUE OF TAXABILITY OF AMOUNT OF ` 16,05,60,000, AS RECEIVED BY THE ASSESSEE FROM THE COCA COLA CO. IN LIEU OF SETTLEMENT OF DISPUTES. 55. IN THE PRESENT CASE, AS ALREADY STATED ABOVE, THE L EARNED COMMISSIONER (APPEALS) HAS TAKEN A DIFFERENT VIEW T HAT THE AMOUNT RECEIVED BY THE ASSESSEE IS CASUAL AND NON RECURRING NATURE, WHEREAS, THE ASSESSING OFFICER HAS MADE PROTECTIVE ADDITION AFTER OBSERVIN G THAT SUBSTANTIVE ADDITION HAS BEEN MADE IN CASE OF AQUA BISLERI LTD. I.E., LFFL AS THE SAME IS CHARGEABLE TO TAX AS LONG TERM CAPITAL GAIN. SINCE THE FACTS AND ISSUE ARE SIMILAR WHICH ISSUE HAS BEEN DISCUSSED BY US ALREAD Y IN THE FORGOING PARAGRAPHS, THE SAME WILL APPLY MUTATIS MUTANDIS IN THE PRESENT CASE ALSO, THEREFORE, THESE GROUNDS ARE TREATED AS ALLOWED AS WE HAVE ALREADY HELD THAT THE AMOUNT RECEIVED BY THE ASSESSEE IS A CAPITAL RE CEIPT WHICH IS NOT TAXABLE. 56. IN GROUND NO.9 AND 10, THE ASSESSEE HAS CHALLENGED THAT BOTH THE AUTHORITIES HAVE NOT CONSIDERED THE ASSESSEES CLAI M FOR DEDUCTION IN RESPECT OF DEPOSIT ON BOTTLES AND CRATES REFUNDED DURING TH E YEAR AMOUNTING TO ` 8,30,307. PARLE SOFT DRINKS PVT. LTD., ETC. 44 57. THE RELEVANT FACTS, APROPOS THE AFORESAID ISSUE ARE THAT, THE ASSESSEE IN THE ACCOUNTS FOR THE YEAR ENDING 31 ST MARCH 1988, HAD SHOWN AN AMOUNT OF ` 3,42,84,765, BEING DEPOSITS RECEIVED IN RESPECT OF BOTTLES AND CRATES AS TRADE DEPOSITS UNDER THE HEAD CURRENT LIABILITIES. BEFORE THE ASSESSING OFFICER, THE ASSESSEE SUBMITTED THE DETAILS OF DEPO SITS RECEIVED ON BOTTLES AND CRATES ALONG WITH CONFIRMATION RECEIVED FROM LO CAL RETAILERS / STOCKIEST. IT WAS ALSO SUBMITTED THAT IN THE ASSESSMENT YEAR 1996 97 AND 199798, THESE DEPOSITS WHICH WERE RECEIVED IN RESPECT OF BO TTLES AND CRATES HAVE ALREADY BEEN TAXED BY THE ASSESSING OFFICER UNDER S ECTION 143(3) AS UNEXPLAINED CREDITS. IN THIS YEAR, THE ASSESSEE HAS REFUNDED THE DEPOSITS AGGREGATING TO ` 8,30,307, THE LEARNED COMMISSIONER (APPEALS) OBSER VED THAT THE ASSESSING OFFICER HAS NOT MADE ANY OBSERVA TION AND HELD AS UNDER: A. THE APPELLANT DID NOT CLAIM DEDUCTION OF ` `` ` 53,82,923 IN THE RETURN OF INCOME FILED BY IT AND, THEREFORE, WITHIN THE MEANING OF S ECTION 246A(1), THE APPELLANT CANNOT BE SAID TO BE AGGRIEVED BY THE A.OS ORDER B ECAUSE THE A.O. HAD NOT DONE ANYTHING IN THIS RESPECT BUT ONLY ACCEPTED THE CLAIM OF THE ASSESSEE. B. THE APPELLANT CANNOT BE SAID TO BE AGGRIEVED IN RES PECT OF NON-ALLOWANCE OF THIS AMOUNT BECAUSE NO SUCH CLAIM WAS MADE IN THE R ETURN OF INCOME. C. THE ADDITION OF ` `` ` 136,28,048 AND ` `` ` 53,82,923 IN EARLIER YEARS IS MADE U/S 68 OF THE ACT. THUS, IT IS CLEAR THAT THIS AMOUNT HAVE BEEN TREATED AS UNEXPLAINED CASH CREDITS. IN VIEW OF THIS AS A RESULT OF REPAYM ENT OF THIS AMOUNT NO DEDUCTION CAN BE CLAIMED BY THE APPELLANT. 58. BEFORE US, THE LEARNED SENIOR COUNSEL, MR. FIROZE ANDHYARAJINA, SUBMITTED THAT THESE DEPOSITS WERE RECEIVED AND WAS TAXED AND NOW IT HAS BEEN REFUNDED AGAIN. THIS MATTER CAN BE VERIFIE D BY THE ASSESSING OFFICER. PARLE SOFT DRINKS PVT. LTD., ETC. 45 THE LEARNED SPECIAL COUNSEL, DR. P. DANIEL, RELIED UPON THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS). 59. AFTER GOING THROUGH THE SUBMISSIONS AND THE FINDING S OF THE LEARNED COMMISSIONER (APPEALS), WE ARE OF THE OPINION THAT THIS MATTER SHOULD BE RESTORE BACK TO THE FILE OF THE ASSESSING OFFICER T O VERIFY, WHETHER THESE DEPOSITS HAVE BEEN TAXED AND HAS BEEN REFUNDED AGAI N TO THE CUSTOMERS OF THE ASSESSEE. THIS GROUND IS THUS TREATED AS ALLOWE D FOR STATISTICAL PURPOSES. 60. GROUND NO.11 AND 12, RELATE TO PRIOR PERIOD EXPENSE S AMOUNTING TO ` 1,63,901. 61. THE FACTS, AS NOTED BY THE LEARNED COMMISSIONER (AP PEALS), ARE THAT THE ASSESSEE IN THE TAX AUDIT REPORT FILED ALONG WI TH THE RETURN OF INCOME HAS SHOWN AN AMOUNT OF ` 1,63,901 AS NET PRIOR PERIOD EXPENSES. THESE EXPENSES WERE NOT CLAIMED AS DEDUCTION IN THE RETUR N OF INCOME ON THE GROUND THAT THE ASSESSEE WAS MAKING A CLAIM FOR DED UCTION IN RESPECT OF THE SAID AMOUNT IN THE ASSESSMENT YEAR 199798. IN THE ASSESSMENT YEAR 1997 98, THE ASSESSING OFFICER HAS NOT ALLOWED THE SAID CLAIM UNDER SECTION 143(3) AND, THEREFORE, IT SHOULD BE ALLOWED IN THIS YEAR. 62. THE LEARNED COMMISSIONER (APPEALS) HAS DISALLOWED T HE ASSESSEES CLAIM ON THE GROUND THAT THE SAME HAS NOT BEEN CLAI MED IN THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 199899. AND THEREFO RE, THERE SHOULD BE NO GRIEVANCE. MOREOVER, THIS EXPENDITURE RELATES TO TH E ASSESSMENT YEAR 1997 PARLE SOFT DRINKS PVT. LTD., ETC. 46 98 WHICH SHOULD HAVE BEEN CLAIMED AND ALLOWED IN TH E ASSESSMENT YEAR 199798 ONLY. ACCORDINGLY, HE DISALLOWED THIS CLAIM . 63. BEFORE US, THE LEARNED COUNSEL SUBMITTED THAT THIS CLAIM HAS BEEN CRYSTALLIZED DURING THE YEAR AND, THEREFORE, THE SA ME SHOULD BE ALLOWED IN THIS YEAR BECAUSE THE ASSESSING OFFICER HAS DISALLO WED IN ASSESSMENT YEAR 199798 ON THIS GROUND ALONE. 64. UNDER THE AFORESAID FACTS, WE SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE WHETHER THESE EXPENSES HAVE BEEN CRYSTALLIZED DURING THE YEAR OR NOT AND IF THAT IS SO THE SAME S HOULD BE ALLOWED. THUS, GROUND NO.11 AND 12 ARE TREATED AS ALLOWED FOR STAT ISTICAL PURPOSES. 65. IN GROUND NO.13 AND 14, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF NET EXPENSES AMOUNTING TO ` 19,741, WHICH COMPRISE OF PRIOR PERIOD EXPENSES AND PRIOR PERIOD INCOME. 66. THIS AMOUNT WAS NOT CLAIMED IN THE RETURN OF INCOME IN THIS YEAR AND WAS DEBITED IN THE ACCOUNTS OF THE ASSESSMENT YEAR 19992000. 67. BEFORE US, IT HAS BEEN SUBMITTED THAT THE SAID AMOU NT PERTAINS TO ASSESSMENT YEAR 199899 AND OUGHT TO HAVE BEEN ALLO WED IN THIS YEAR WHEN THE ASSESSING OFFICER IN THE ASSESSMENT YEAR 19992 000 HAS NOT ALLOWED THIS CLAIM IN THE ORDER PASSED UNDER SECTION 143(3). PARLE SOFT DRINKS PVT. LTD., ETC. 47 68. IN THE ABSENCE OF ANY DETAILS AS TO HOW THIS AMOUNT PERTAINS TO THE ASSESSMENT YEAR 199899, SUCH A CLAIM MADE BY THE A SSESSEE CANNOT BE SUSTAINED AND, ACCORDINGLY, WE FIND NO MERITS IN TH E GROUNDS RAISED BY THE ASSESSEE AND THE SAME ARE TREATED AS DISMISSED. IN THE RESULT, ASSESSEES APPEAL IS ITA NO.825/MUM ./2003, TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. WE NOW TAKE UP REVENUES APPEAL IN ITA NO.877/MUM./ 2003, VIDE WHICH, FOLLOWING GROUNDS HAVE BEEN RAISED: (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.29,72,701/- MA DE ON ACCOUNT OF EXCESS CONSUMPTION OF RAW MATERIALS SHOWN BY THE ASSESSEE. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE DECISIO N OF THE LD.CIT(A) AND ITAT HAS NOT BEEN ACCEPTED ON THIS ISSUE IN THE EARLIER YEARS AND APPEAL HAS BEEN FILED TO THE HIGH COURT; (III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT DISALLOWANCE OF INTEREST ON B ORROWINGS OF RS,3,40,327/- MADE BY THE ASSESSING OFFICER WAS NOT JUSTIFIED AND CONSEQUENTLY ERRED IN DELETING THE SAID ADDITION. (IV) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN PLACING RELIANCE ON THE APPELLATE ORDER PA SSED BY CIT(A) FOR A.Y. 1996-97 IN ASSESSEES OWN CASE IGNORING THE GROUNDS OF APPEAL FILED BY THE DEPARTMENT AGAINST THE SAID DECISION. (V) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CJT(A) HAS ERRED IN DELETING THE ADDITION OF RS.22,22,249/- MA DE ON ACCOUNT OF UNUTILISED MODVAT CREDIT FAILING TO APPRECIATE THE FACT THAT T HE DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. NIPPON CHEMICALS LTD. [245 ITR 384] HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND A SPECIAL LEAVE PETITION HAS BEEN FILED TO THE SUPREME COURT; WHICH IS PENDING (VI) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO TREAT THE SALE CONSIDE RATION OF BOTTLES AND CRATES AS PART OF THE BLOCK OF ASSETS; PARLE SOFT DRINKS PVT. LTD., ETC. 48 (VII) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT IN EARLIER Y EARS THE ASSESSEE CLAIMED PURCHASE OF BOTTLES AND CRATES AS REVENUE EXPENDITU RE IN THE P & L A/C; (VIII) ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE BOT TLES PURCHASED DURING A.YS. 1993-94, 1994-95 AND 1995-96 CANNOT FORM PART OF BL OCK OF ASSETS SINCE ON THESE BOTTLES, 100% DEPRECIATION WAS CLAIMED BY THE ASSESSEE AND THE VALUE OF SUCH ASSETS WAS ZERO. THE LD.CIT(A) FAILED TO OB SERVE THAT THE ASSESSEE DID NOT DISCHARGE HIS ONUS OF MAINTAINING PROPER REGIST ER OF STOCK OF BOTTLES AND CRATES PURCHASED IN DIFFERENT YEARS AND NO EVIDENCE WITH REGARD TO THE FACT THAT THE BOTTLES SOLD WERE OF CURRENT YEAR, WAS PRO DUCED BEFORE THE AO; (IX) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION DESPITE THE FACT THA T THE ASSESSEE ADMITTED BEFORE THE AO THAT BOTTLES WHICH WERE WORN OUT OVER THE TIME WERE SOLD, WHICH NATURALLY PROVES THAT THE ASSETS PURCHASED IN THE EARLIER YEARS WERE SOLD. 69. BEFORE US, IT HAS BEEN ADMITTED BY BOTH THE PARTIES THAT, BY AND LARGE, MOST OF THE ISSUES ARE COVERED BY THE EARLIER YEARS ORDER PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE. 70. IN GROUND NO.1, THE REVENUE HAS CHALLENGED THE DELE TION OF ADDITION OF ` 29,72,701 ON ACCOUNT OF EXCESS CONSUMPTION OF RAW MATERIAL. 71. BOTH THE PARTIES AGREED BEFORE US THAT THIS ISSUE H AS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ASSESSEE S OWN CASE RIGHT FROM THE ASSESSMENT YEAR 198990 TO 199596. IN ALL THESE YE ARS, THE TRIBUNAL HAS ACCEPTED THE ASSESSEES CONTENTIONS AND, THEREFORE, AS A MATTER OF PRECEDENCE, WE ALSO ALLOW THIS ISSUE IN FAVOUR OF T HE ASSESSEE. ACCORDINGLY, GROUND NO.1 AND 2, RAISED BY THE REVENUE ARE TREATE D AS DISMISSED. 72. GROUND NO.3, THE REVENUE HAS CHALLENGED THE DISALLO WANCE OF INTEREST ON BORROWINGS BY THE EMPLOYEES OF ` 3,40,327. PARLE SOFT DRINKS PVT. LTD., ETC. 49 73. BOTH THE PARTIES AGREED THAT THIS ISSUE HAS BEEN DE CIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 199697 AFTER DETAILED DISCUSSION. 74. IN VIEW OF THESE ADMITTED FACTS AND RESPECTFULLY FO LLOWING THE DECISION OF THE TRIBUNAL IN ITA NO.3619/MUM./2001, FOR THE A SSESSMENT YEAR 1996 97, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY THE GROUND NO.3 AND 4 ARE TREATED AS DISMISSED. 75. IN GROUND NO.5, THE REVENUE HAS CHALLENGED THAT THE DELETION OF ` 22,22,249, MADE ON ACCOUNT OF UNUTILIZED MODVAT CRE DIT BY THE LEARNED COMMISSIONER (APPEALS) BY FOLLOWING THE DECISION OF BOMBAY HIGH COURT IN CIT V/S INDO NIPPON CHEMICALS, 245 ITR 384 (BOM.). THE REVENUES MAIN CONTENTION IS THAT THIS JUDGMENT HAS NOT BEEN ACCEP TED BY THE REVENUE AND SLP HAS BEEN FILED BEFORE THE HON'BLE SUPREME COURT . 76. AS ADMITTED BY BOTH THE PARTIES, THE HON'BLE SUPREM E COURT HAS AFFIRMED THE DECISION OF BOMBAY HIGH COURT IN CIT V /S INDO NIPPON CHEMICAL, 261 ITR 275. ACCORDINGLY, GROUND NO.5, IS TREATED A S DISMISSED. 77. IN GROUND NO.6 TO 9, THE REVENUE HAS CHALLENGED THE DIRECTION OF THE LEARNED COMMISSIONER (APPEALS) TO TREAT THE SALE OF CONSIDERATION OF BOTTLES AND CRATES AS PART OF THE BLOCK OF ASSETS. 78. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD S HOWN SALE OF BOTTLES AMOUNTING TO ` 84,67,666 FROM THE BLOCK OF ASSETS, COMPRISING PARLE SOFT DRINKS PVT. LTD., ETC. 50 BOTTLES ON WHICH DEPRECIATION @ 50% IS ADMISSIBLE. HE ALSO NOTED THAT UP TO THE ASSESSMENT YEAR 199596, THE ASSESSEE HAS CLAIM ED DEPRECIATION @ 100% ON BOTTLES AND CRATES AS THE COST WAS LESS THA N ` 5,000. HE REQUIRED THE ASSESSEE TO FURNISH DETAILS OF THESE BOTTLES ON WHICH 100% DEPRECIATION HAS BEEN CLAIMED IN THE PREVIOUS YEAR. THE ASSESSEE REPLIED THAT NO SEPARATE REGISTERS HAVE BEEN MAINTAINED FOR THE BOTTLES AND ALSO ACCEPTED THAT BOTTLES ON WHICH 100% DEPRECIATION HAS BEEN CLAIMED CANNOT BE DISTINGUISHED FROM THE BOTTLES ON WHICH 50% DEPRECIATION IS BEING CLAI MED IN THE YEAR. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE, VI DE LETTER DATED 17 TH MARCH 2001, HAS GIVEN A DETAIL SUBMISSION WHICH HAS BEEN INCORPORATED BY THE ASSESSING OFFICER AT PAGE5 OF THE ASSESSMENT O RDER. THE ASSESSING OFFICER REJECTED THE ASSESSEES SUBMISSIONS ON THE GROUND THAT UP TO THE ASSESSMENT YEAR 199596, THE ASSESSEE HAS CLAIMED T HE EXPENDITURE ON THE PURCHASE OF BOTTLES AND CRATES AS REVENUE EXPENDITU RE BEING THE VALUE LESS THAN ` 5,000 AND IN THIS YEAR, THE ASSESSEE HAS FAILED TO PROVE FOR SUCH BOTTLES AND CRATES SOLD THIS YEAR WERE PURCHASED AF TER 31 ST MARCH 1995. ACCORDINGLY, HE ALLOWED THE DEPRECIATION FROM THE B LOCK OF ASSETS COMPRISING OF BOTTLES AND CRATES AT ` 42,38,833 AND BALANCE WAS ADDED. 79. BEFORE THE LEARNED COMMISSIONER (APPEALS), FOLLOWIN G SUBMISSIONS WERE MADE: 24. GROUND NO.6 OF THE APPEAL IS AGAINST ADDITION O F RS.84,67,666/- ON ACCOUNT OF SALE OF BOTTLES AND CRATES AS REVENUE RE CEIPTS. IN THIS REGARD IT IS SEEN THAT AT PARA 8 OF PAGE 6 OF THE ASSESSMENT ORD ER THAT THE A.O REJECTED APPELLANTS SUBMISSION THAT AS THE BOTTLES AND CRAT ES ON WHICH 100% DEPRECIATION HAD BEEN CLAIMED DID NOT FORM PART OF ANY BLOCK OF ASSETS, SALES PARLE SOFT DRINKS PVT. LTD., ETC. 51 PROCEEDS RECEIVED IN RESPECT THEREOF DO NOT ATTRACT THE PROVISIONS OF SECTION 50 AND HENCE CANNOT BE TAXED AS DEEMED SHORT TERM C APITAL GAIN. THE A.O FURTHER HELD THAT THE SAID EXPENDITURE HAD BEEN CLA IMED AS REVENUE EXPENDITURE ANYTHING RECEIVED AGAINST THAT WOULD AL SO BE REVENUE RECEIPT AND AS THE ASSETS COULD NOT PROVE THAT THE BOTTLES AND CRATES SOLD IN THE CURRENT YEAR WERE PURCHASED AFTER 1 ST MARCH, 1995, THE BLOCK OF ASSETS COMPRISING BOTTLES AND CRATES WOULD NOT BE REDUCED BY THAT AMO UNT AND THE ASSESSEE WOULD BE ENTITLED FOR ADDITIONAL DEPRECIATION OF RS .42,38,833/- I.E., AN ADDITION OF RS.42,38,833/- WAS MADE TO THE TOTAL IN COME. AS AGAINST ADDITION OF RS.42,38,833/- THE SUBMISSION OF THE APPELLANT I S AS UNDER IN THE STATEMENT SHOWING COMPUTATION OF DEPRECIATI ON, THE APPELLANT HAD EXCLUDED AN AMOUNT OF RS.84,67,666/- IN RESPECT OF SALE OF OLD BOTTLES FROM THE BLOCK OF ASSETS ENTITLED TO DEPRECIATION @ 50%. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AP PELLANT WAS ASKED TO JUSTIFY AS TO WHY THE SALE OF OLD BOTTLES AND CRATE S ON WHICH 100% DEPRECIATION HAD BEEN CLAIMED IN THE EARLIER ASSESS MENT YEARS SHOULD NOT BE TREATED AS DEEMED SHORT TERM CAPITAL GAINS WHILE CO MPUTING THE TOTAL INCOME. THE APPELLANT VIDE LETTER DT 17TH MARCH, 2001 FURNI SHED DETAILED SUBMISSION IN RESPECT OF THE AFORESAID ISSUE. IN THE ASSESSMENT ORDER PASSED U/S. 143(3), THE APP ELLANTS SUBMISSIONS HAVE BEEN REJECTED AND SALE OF BOTTLES AND CRATES HAS BE EN TREATED AS REVENUE RECEIPT AND PART OF BUSINESS INCOME. FURTHER, THE B LOCK OF ASSETS COMPRISING OF BOTTLES AND CRATES ELIGIBLE FOR DEPRECIATION @ 5 0% HAS NOT BEEN REDUCED BY THE AFORESAID AMOUNT AND THEREBY ADDITIONAL DEPRECI ATION IF RS. 42,38,833/- HAS BEEN GRANTED RESULTING IN A NET ADDITION OF RS. 42,38,833/. 80. BASED ON THESE SUBMISSIONS, THE LEARNED COMMISSIONE R (APPEALS) HAS DELETED THE ADDITIONS AFTER OBSERVING AND HOLDING A S UNDER: 25. SINCE THE BOTTLES AND CRATES ON ACCOUNT OF SALE ON WHICH RS.84,67,666/- IS RECEIVED COULD NOT BE SEGREGATED BETWEEN THOSE PURC HASES PRIOR TO 1.4.95 AND W.E.F. 1.4.95 THE ENTIRE RECEIPT IS REDUCED FRO M BLOCK OF ASSETS FROM THE BOTTLES AND CRATES AS PER SUBMISSION OF THE APPELLA NT. IT IS SUBMITTED BY THE APPELLANT THAT: (A) THE ACTION OF THE A.O IN TREATING THE SAME AS R EVENUE RECEIPT IS WRONG BECAUSE THEY ARE SALE PURCHASES OF CAPITAL RECEIPTS IN FORM OF BOTTLES AND CRATES. IT IS FURTHER SUBMITTED THAT THERE IS NO LO SS TO REVENUE BECAUSE IF ASSESSEES VIEW POINT IS ACCEPTED SALE PROCEEDS WIL L GET TAXED OVER A PERIOD OF TWO YEARS BECAUSE THE CLAIM OF DEPRECIATION WILL GO DOWN BY THE CORRESPONDING AMOUNT. (B) IF THE A.OS APPROACH IS TAKEN TO LOGICAL CONCL USION, THEN WHAT CAN BE TAXED IS ONLY INCOME UNDER THE HEAD CAPITAL GAIN WHERE COST OF ACQUISITION IS TO BE REDUCED FROM SALE PROCEEDS AND THIS COURSE OF ACTION SHALL BE DETRIMENTAL TO THE INTEREST OF REVENUE BECAUSE CAPI TAL GAIN SHALL BE COMPUTED BY DEDUCTING THE COST OF ACQUISITION OF ASSETS WHIC H SHALL BE MORE THAN IN CASE OF NEW BOTTLE AS COMPARED TO SALE PROCEEDS OF OLD B OTTLES AND CRATES. PARLE SOFT DRINKS PVT. LTD., ETC. 52 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND PERUSED THE MATERIAL ON RECORD. I FIND MERIT IN SUBMISSION OF A PPELLANT THAT SALE PROCEEDS ON CAPITAL ASSETS CANNOT BE HELD TO BE REVENUE RECE IPTS. IN VIEW OF THIS AND IN VIEW OF OTHER SUBMISSIONS OF THE APPELLANT ENUMERAT ED HEREIN BEFORE , IT IS HELD THAT THE ACTION OF THE APPELLANT IN REDUCING T HE SALE PROCEED FROM BLOCK OF ASSETS OF BOTTLES AND PLANTS IN ACCORDANCE WITH LAW AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, ADDITION OF RS.42,38 ,833/- MADE BY THE A.O BY TREATING THE PROCEEDS FROM SALE OF BOTTLES AND CRAT ES AS REVENUE RECEIPT IS HELD TO BE UNSUSTAINABLE AND IS DELETED. 81. BOTH THE PARTIES HAVE RELIED UPON THE RESPECTIVE OR DERS. 82. AFTER GOING THROUGH THE RELEVANT FINDINGS OF THE AS SESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS), WE AGREE WITH T HE CONCLUSION DRAWN BY THE LEARNED COMMISSIONER (APPEALS) THAT SALE PROCEE DS ON A CAPITAL ASSET CANNOT BE HELD TO BE REVENUE RECEIPT AND AFTER THE SALE, THE BLOCK OF ASSETS HAVE BEEN REDUCED AND ACCORDINGLY, WHATEVER IS THER E IN THE BLOCK OF ASSETS, DEPRECIATION HAS TO BE ALLOWED IN ACCORDANCE WITH T HE PROVISIONS OF LAW. ACCORDINGLY, THE FINDING GIVEN BY THE LEARNED COMMI SSIONER (APPEALS) IS AFFIRMED AND THE GROUNDS RAISED BY THE REVENUE ARE TREATED AS DISMISSED. 83. IN THE RESULT, REVENUES APPEAL IN ITA NO.877/M UM./2003 IS TREATED AS DISMISSED. WE NOW TAKE UP REVENUES APPEAL IN ITA NO.744/MUM./ 2002. 84. IN GROUND NO.1 ALONG WITH VARIOUS SUBGROUNDS T HEREIN, THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF ` 32,11,20,000 WHICH REPRESENTS THE AMOUNT RECEIVED FROM THE COCA COLA CO. TOWARDS RELINQUISHMENT OF ROFR. PARLE SOFT DRINKS PVT. LTD., ETC. 53 85. IN THE PRESENT CASE, THE ASSESSING OFFICER HAS TAXED THE AMOUNT RECEIVED FROM THE COCA COLA CO. AS LONG TERM CAPITA L GAIN ON SUBSTANTIVE BASIS IN THE CASE OF THE ASSESSEE. AS ALREADY DISCU SSED IN DETAIL IN THE CASE OF PARLE SOFT DRINKS PVT. LTD. I.E., THE AQUA BISLE RI LTD., WAS NOT ENTITLED FOR RECEIVING THE COMPENSATION AMOUNT AS THE ROFR NEVER VESTED WITH THIS ASSESSEE. THE FINDING OF THE LEARNED COMMISSIONER (APPEALS) IS TO THIS EFFECT ONLY. 86. SINCE WE HAVE ALREADY HELD THAT THIS AMOUNT IS, FIRSTLY, NOT TAXABLE AS IT IS A CAPITAL RECEIPT IN THE HANDS OF PARLE SOFT DRI NKS PVT. LTD. AND PARLE BOTTLING PVT. LTD. AND SECONDLY, THE PRESENT ASSESS EE WAS NOT ENTITLED FOR ANY KIND OF COMPENSATION FOR THE BREACH OF ROFR. ACCORD INGLY, THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) IN THIS CASE ARE AFF IRMED AND THE GROUND NO.1, RAISED BY THE REVENUE IS TREATED AS DISMISSED . 87. GROUND NO.2, THE REVENUE HAS CHALLENGED THE DEL ETION OF ADDITION OF ` 3,94,863 ON ACCOUNT OF MODVAT CREDIT ON THE GROUND THAT THE DECISION OF BOMBAY HIGH COURT IN NIPPON CHEMICALS CO. PVT. LTD. (SUPRA), HAS NOT BEEN ACCEPTED BY THE REVENUE. 88. AS ADMITTED BY BOTH THE PARTIES, THIS ISSUE NOW STANDS DECIDED BY THE HON'BLE SUPREME COURT IN THE SAME CASE WHICH IS NOW REPORTED AS 261 ITR PARLE SOFT DRINKS PVT. LTD., ETC. 54 75 (SC). THUS, THERE IS NO MERIT IN THE GROUND RAIS ED BY THE REVENUE. ACCORDINGLY, GROUND NO.2, RAISED BY THE REVENUE IS TREATED DISMISSED. 89. IN THE RESULT, REVENUES APPEAL IN ITA NO.744/M UM./2002, IS TREATED AS DISMISSED. WE NOW TAKE UP ASSESSEES CROSS OBJECTION (C.O. NO. 35/MUM./2003), VIDE WHICH, THE ASSESSEE HAS TAKEN AN ALTERNATIVE C LAIM WITH REGARD TO THE RECEIPT OF ` 32.11 CRORES. 90. SINCE WE HAVE ALREADY GIVEN A DETAIL FINDINGS O N THIS SCORE HOLDING THAT THE AMOUNT AGGREGATING TO ` 32.11 CRORES IS A CAPITAL RECEIPT IN THE HANDS OF PARLE SOFT DRINKS PVT. LTD. AND PARLE BOTTLING PVT. LTD., WHICH IS NON TAXABLE AND, THEREFORE, THE CROSS OBJECTION AS RAISED BY TH E ASSESSEE IN THIS CASE IS TREATED AS ACADEMIC AND, ACCORDINGLY, THE CROSS OBJ ECTION IS DISMISSED. 91. IN THE RESULT, ASSESSEES CROSS OBJECTION NO.35 /MUM./2003, IS TREATED AS DISMISSED. 92. TO SUM UP, ASSESSEES APPEAL IN ITA NO.5072/MUM ./2001, IS ALLOWED. REVENUES APPEAL IN ITA NO.5284/MUM./2001 IS DISMIS SED. ASSESSEES CROSS OBJECTION NO.136/MUM./2002, IS ALLOWED FOR STATISTI CAL PURPOSES. ASSESEES APPEAL IN ITA NO.825/MUM./2003 IS PARTLY ALLOWED FO R STATISTICAL PURPOSES. PARLE SOFT DRINKS PVT. LTD., ETC. 55 REVENUES APPEAL IN ITA NO.877/MUM./2003 IS DISMISS ED. REVENUES APPEAL IN ITA NO.744/MUM./2002 IS DISMISSED AND ASSESSEES CROSS OBJECTION NO.35/ MUM./2003 IS DISMISSED. % 6 8, : ;*< 20 TH SEPTEMBER 2013 6 = > ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH SEPTEMBER 2013 SD/- . .. . B. RAMAKOTAIAH ACCOUNTANT MEMBER SD/- #$ #$ #$ #$ %& %& %& %& ' ' ' ' AMIT SHUKLA JUDICIAL MEMBER MUMBAI, ;* ;* ;* ;* DATED : 20 TH SEPTEMBER 2013 % 6 /'$#? @?,$ / COPY OF THE ORDER FORWARDED TO : (1) '* +5$ / THE ASSESSEE; (2) ' / THE REVENUE; (3) A () / THE CIT(A); (4) A / THE CIT, MUMBAI CITY CONCERNED; (5) ?'D= /'$'* , , / THE DR, ITAT, MUMBAI; (6) =E+ F / GUARD FILE. 0?$ /'$ / TRUE COPY %* / BY ORDER / . GH / PRADEEP J. CHOWDHURY '5I '* G' / SR. PRIVATE SECRETARY 2 / J / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PARLE SOFT DRINKS PVT. LTD., ETC. 56 DATE INITIAL ORIGINAL DICTATION PAID IS ENCLOSED AT THE END OF T HE FILE 1. DRAFT DICTATED ON UPTO 13.9.2013 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 17.9.2013 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 17.9.2013 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 17.9.2013 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 17.9.2013 SR.PS 6. DATE OF PRONOUNCEMENT 20.9.2013 SR.PS 7. FILE SENT TO THE BENCH CLERK 20.9.2013 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER