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Issues Involved:
1. Determination of assessee's income chargeable to tax on the transfer of credit card operations. 2. Classification of membership and magazine subscription received in advance. 3. Taxation of compensation received in respect of properties in Delhi and Bangalore. 4. Taxation of interest received on IDBI bonds. Detailed Analysis: 1. Determination of Assessee's Income Chargeable to Tax: The primary issue was whether the transfer of the assessee-company's credit card operations to Citibank constituted long-term or short-term capital gains. The assessee argued that the transfer should be treated as long-term capital gains since the business and intangible assets were held for more than 36 months. The Department contended that the renewals of the franchise agreement should be treated as fresh acquisitions, thereby classifying the gains as short-term. Judgment: The Tribunal held that the assets were continuously held by the assessee since 1979, and the renewals did not constitute fresh acquisitions. Therefore, the gains from the transfer were classified as long-term capital gains. 2. Classification of Membership and Magazine Subscription Received in Advance: The assessee received advance membership and magazine subscriptions, which were not transferred to Citibank but retained and credited to the Profit and Loss Account. The Department treated these amounts as revenue receipts, while the assessee argued they should be part of the sale consideration for the transfer. Judgment: The Tribunal concluded that these amounts were part of the overall sale consideration for the business transfer. The amounts were retained by mutual agreement and should be treated as part of the capital gains, not revenue receipts. 3. Taxation of Compensation Received in Respect of Properties in Delhi and Bangalore: The assessee received rental income from properties in Delhi and Bangalore and claimed it as business income. The Department assessed it as income from house property under Section 27(iiib) of the Income-tax Act, arguing that the assessee acquired rights under a lease for a term not less than 12 years. Judgment: The Tribunal upheld the Department's view, stating that Section 27(iiib) applied irrespective of whether the rights were acquired under a lease or sub-lease. The income was assessed as income from house property, and deductions were limited to those permissible under Sections 22 to 27. 4. Taxation of Interest Received on IDBI Bonds: The assessee received discounted interest on IDBI capital bonds and claimed that only the interest accrued during the relevant previous year should be taxed. The Department rejected this claim. Judgment: The Tribunal applied the Supreme Court decision in Madras Industrial Investment Corpn. Ltd. v. CIT, holding that the interest should be taxed on an accrual basis each year. The CIT(A)'s decision to tax the interest on an accrual basis was upheld. Conclusion: The Tribunal's judgment provided a comprehensive analysis of each issue, affirming the classification of the transfer of credit card operations as long-term capital gains, treating advance subscriptions as part of the sale consideration, assessing rental income from properties as income from house property, and taxing interest on IDBI bonds on an accrual basis. The assessee's appeal was partly allowed, and the Department's appeal was dismissed.
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