PARLE SOFT DRINKS P.LTD, V. DCIT SP RG 6,

MA 101/MUM/2014

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 2145 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 1998-1999
• Appeal Filed On: 04-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ADGIRI
• Assessee Lawyers: R R VORA AW M R ANKIT KOCHAR
• Keywords: Capital receipt

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI , , BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEM BER . / M.A . NO. 101 / MUM./20 1 4 ( . / ITA NO. 5284 / MUM./ 20 0 1 ) ( / ASSESSMENT YEAR : 1998 99 ) PARLE SOFT DRINKS PVT. LTD. WESTERN EXPRESS HIGHWAY ANDHERI (E), MUMBAI 400 099 .. / APPELLANT V/S J T . COMMISSIONER OF INCOME TAX SPECIAL RANGE 6, AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AAACP420J / ASSESSEE BY : MR. R.R. VORA A/W M R. ANKIT KOCHAR / REVENUE BY : MR. B. YADGIRI / DATE OF HEARING 0 4 .0 7 .2014 / DATE OF ORDER 11.07.2014 / ORDER , / PER AMIT SHUKLA , J.M. THIS MISCELLANEOUS APPLICATION IS ARISING OUT OF REVENUES APPEAL BEING ITA NO. 5284 /MUM./20 0 1 , FOR ASSESSMENT YEAR S 20 0 6 07 . 2 . THE MAIN CONTENTION OF THE ASSESSEE RAISED IN THIS MISC. APPLICATION IS THAT , WHILE DECIDING GROUND NO.5, IN REVENUES APPEAL, PARLE SOFT DRINKS PVT. LTD. 2 THE TR IBUNAL HAS HELD THAT THE ISSUE OF LIABILITY OF TAX UNDER SECTION 115JA, HAS BECOME PURELY ACADEMIC AS THE OVERALL ISSUE OF TAXABILITY OF COMPENSATION RECEIVED BY THE ASSESSEE IS NOT TAXABLE AS IT IS CAPITAL RECEIPT AND IT IS ALSO NOT TAXABLE AS CAPITAL GAI N AND, THEREFORE, NO ADDITION ON THIS GROUND CAN BE MADE IN BOOK PROFIT. 3 . BEFORE US, THE LEARNED COUNSEL, MR. RAJAN VORA, ON BEHALF OF THE ASSESSEE, SUBMITTED THAT DURING THE COURSE OF HEARING, THE ASSESSEE HAD SUBMITTED A COPY OF THE TRIBUNAL ORDER IN CAS E OF DISTILLERY SALES LTD., ITA NO.6571/MUM./2002, WHEREIN, ON SIMILAR ISSUE, THE TRIBUNAL HAS DECIDED THE ISSUE OF SECTION 115JA, IN FAVOUR OF THE ASSESSEE AND, THEREFORE, THIS MATTER SHOULD HAVE BEEN DECIDED IN A SIMILAR MANNER. IN ANY CASE, H E SUBMITTED THAT THE FINDINGS GIVEN BY THE TRIBUNAL IN PARA 48, NEEDS TO BE CLARIFIED SO THAT THER E REMAIN S NO AMBIGUITY, WHILE INTERPRETING THE ISSUE OF BOOK PROFIT UNDER SECTION 115JA. 4 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUBMITTED THAT ONCE THE ISSUE OF TAXABILITY OF THE RECEIPTS WHICH IS THE SUBJECT MATTER OF ADDITION IN THE BOOK PROFIT UNDER SECTION 115JA, HAS BEEN DECIDED, THEN THE TRIBUNAL HAS RIGHTLY HELD THAT THE ISSUE RAISED IN SECTION 115JA, BECOMES PURELY ACADEMIC. ANY FURTHER FINDI NGS ON MERITS WILL AMOUNT TO REVIEW OF THE EARLIER DECISION. 5 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSEE HAS RECEIVED NET COMPENSATION OF ` 15 , 95 , 82 , 500, FROM COCA COLA COMPANY TOWARDS BREACH OF ROFR AGREEME NT. THE ASSESSEE HAS TREATED IT AS A CAPITAL RECEIPT AND HAS CREDITED TO CAPITAL RESERVES IN THE BALANCE SHEET I.E., IT HAS NOT BEEN TAKEN TO PROFIT & LOSS ACCOUNT. SINCE T HE ASSESSING OFFICER HELD THAT THE COMPENSATION RECEIVED FROM COCA COLA COMPANY IS A TAXABLE RECEIPT BY TREATING IT TO BE A REVENUE RECEIPT , HE, THEREFORE, MADE THE PARLE SOFT DRINKS PVT. LTD. 3 ADDITION WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JA ALSO . THE LEARNED COMMISSIONER (APPEALS) , ON THE OTHER HAND, HELD THAT SUCH A COMPENSATION RECEIVED BY THE ASSESSE E IS TO BE TAXED AS LONG TERM CAPITAL GAIN AND, THEREFORE, IT DOES NOT CONSTITUTE BOOK PROFIT UNDER SECTION 115JA. BESIDES THIS, HE ALSO HELD THAT THE INCOME COMPUTED BY THE ASSESSING OFFICER UNDER SECTION 115JA IS LESS THAN THE TOTAL INCOME COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT, HENCE, THIS ISSUE IS NOT RELEVANT. THE TRIBUNAL, WHILE CONSIDERING BUNCH OF CASES INCLUDING THAT OF THE ASSESSEE, HELD THAT THE COMPENSATION RECEIVED BY THE ASSESSEE IS NOT TAXABLE, AS THE SAME CONSTITUTES CAPITAL RECEIPT S AND FURTHER IT IS ALSO NOT TAXABLE AS LONG TERM CAPITAL GAIN. THUS, THE ENTIRE ADDITION MADE ON THIS SCORE WAS DELETED. IT WAS IN THIS CONTEXT THE TRIBUNAL WHILE ADJUDICATING GROUND NO.5, RELATING TO SIMILAR ADDITION IN BOOK PROFIT UNDER SECTION 115JA, I N REVENUES APPEAL HELD AS UNDER: 48. SINCE WE HAVE ALREADY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE THAT THE AMOUNT RECEIVED BY THE ASSESSEE IS NOT A CAPITAL GAIN BUT A CAPITAL RECEIPT, WHICH IS NOT TAXABLE AND, HENCE, SUCH A GROUND BECOMES PURELY A CADEMIC. 6 . SINCE THE SUBJECT MATTER OF DISPUTE WITH REGARD TO COMPUTATION OF BOOK PROFIT UNDER SECTION 115JA, WAS THE ADDITION ON ACCOUNT OF COMPENSATION AMOUNT OF ` 15,95,82,500, WHICH ITSELF WAS DELETED BY THE TRIBUNAL, THEREFORE, IN THAT CONTEXT, IT WAS OBSERVED BY THE TRIBUNAL THAT TH E ISSUE OF SECTION 115JA, BECOMES PURELY ACADEMIC. IN ANY CASE, THE AMOUNT OF COMPENSATION HAS BEEN HELD TO BE CAPITAL RECEIPT NOT CHARGEABLE TO TAX AND THE SAID AMOUNT HAS NOT ROUTED THROUGH PROFIT & LOSS ACCOUNT BUT DIREC TLY CREDITED TO CAPITAL RESERVE, THEREFORE, THE SAME CANNOT BE INCLUDED WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JA. THERE IS NO REQUIREMENT OF FURTHER ADJUDICATING THE ISSUE ON MERITS OR ON THE SCOPE OF SECTION 115JA IN THE PRESENT APPEAL . W E ARE PARLE SOFT DRINKS PVT. LTD. 4 UNABLE TO UNDERSTAND AS TO WHAT CLARIFICATION / AJUDICATION IS REQUIRED AS CONTENDED BY THE ASSESSEE IN THE PRESENT APPLICATION. THUS, THE MISC. APPLICATION FILED BY THE ASSESSEE IS DISPOSED OFF IN THE MANNER INDICATED ABOVE. 7 . 7. IN THE RESULT, ASSESSEES MISC ELLANEOUS APPLICATION IS DISMISSED . 11 TH JULY 2014 ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JULY 2014 SD/ - SANJAY A RORA ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 11 TH JULY 2014 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT , MUMBAI