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TMI Blog2012 (4) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... tiny. The assessee had transferred In favour of M/s. Praxair India Private Ltd., as per an agreement entered into on 23rd September, 1999, 25,000 cylinders for a sum of Rs. 3,10,75,000/- the business, pending contract and goodwill for a sum of Rs. 2,02,25,000/- and a Non-compete obligation for a sum of Rs. 2,02,00,000/-. The assessing officer proceeded to hold that a sum of Rs. 2,02,25,000/- cannot be treated as a capital receipt but should be treated as a revenue receipt and brought to tax under the head "Profit and Gains of Business''. Further, the non-compete consideration amount of Rs. 2,02,000/- was also treated as the income of the assessee and brought to tax under the head "Profit and Gains of Business." Further, the assessee had inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atus of the assessee and for sterilization of the very source of its income. Therefore, the amount received was a capital receipt. In those circumstances as the amount of Rs. 2,02,25,000/- received is in the nature of capita! receipt it could not be assessed as a revenue receipt. Aggrieved by these two findings the Revenue has preferred this appeal. 3. The appeal was admitted on 25-6-2007 to consider the following two substantial questions of law:- "(1) Whether the Tribunal was right in proceeding to hold that a sum of Rs. 2,02,25,000/-paid by M/s. Praxair Limited for transfer of the assessee's business (other than capital assets for which a separate sum of Rs. 3,10,75,000/-) should be treated as a capital receipt as held by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided elsewhere in this Agreement, is estimated by the parties as an amount of Rs. 7,15,00,000/- (Rupees Seven crores fifteen lakhs) comprising of Rs. 2,02,25,000/- (Rupees Two crores two lakhs and twenty five thousand only) for the sale, transfer and assignment of the said Business and the said Network and the 'benefits and obligations of the Pending Contracts and all the business and commercial rights associated with or embedded therein and for all the goodwill pertaining thereto." 6. Therefore, the consideration of Rs. 2,02,25,000/- is not the consideration paid for transfer of any goodwill. The said consideration is paid for sale, transfer and assigning the business, the network and benefits and obligations of pending contracts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such shares." Section 73 deals with loss and speculative business. Explanation to Section 73 which is clarificatory in nature clearly sets out when a business would be said to be a speculative business. If a Company whose gross total income consists mainly of income which is chargeable under the heads "Interest on securities", the "Income from house property". "Capital gains" and "Income from other sources" and if such Company indulges in purchase and sale of shares then by a deeming provision that it is carrying on the speculation business is not attracted. In the instant case, as set out above, the assessee company has for the relevant assessment year income of Rs. 2,86,75,400/- from sale of cylinders, a sum of Rs. 88,14,690/- the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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