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TMI Blog2013 (9) TMI 888X X X X Extracts X X X X X X X X Extracts X X X X ..... would place it within section 2(14) of the Act read with the explanation but a transfer of the business with all pervasive control being entrusted to the purchaser to the complete and absolute exclusion of the seller whether as a share holder or for its management and control – Appeal is dismissed – Decided against the Assessee. - Income Tax Appeal No.293 of 2012 (O&M), Income Tax Appeal No.294 of 2012 (O&M) - - - Dated:- 22-8-2013 - Rajive Bhalla And Dr. Bharat Bhushan Parsoon,JJ. For the Appellant : Mr. Alok Mittal, Advocate For the Respondent : Ms. Urvashi Dhugga, Advocate ORDER Rajive Bhalla, J. C.M.No.31322-CII of 2012 Prayer in this application is to implead the legal representatives of Harbir Singh Khurana, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides income from other sources. The case was selected for scrutiny and notice was issued under Section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). The Assessing Officer, after considering the entire matter including replies filed and documents placed on record, by the appellant, held that income from Long Term Capital Gain shall be treated as business income of the assessee under Section 28(va) of the Act. The Assessing Officer, in essence, negatived the appellant's plea that the sale of shares, was a mere transfer of share holdings and not a transfer or purchase of business activities of the assessee. The appellant filed an appeal, which was dismissed by the Commissioner of Income Tax (Appeals) (hereinafter r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section vide the Finance Act 2012 with retrospective effect? (ii) Whether in facts and circumstances of the case, the ld. Authorities below have erred in holding that amount received for sale of shares is on account of Non-Compete Covenants contained in Article 8 of the Sale Purchase Agreement by ignoring the fact that the same has been received on account of transfer of shares and no consideration whatsoever has been paid towards the said Non-compete Covenant and the price settled between the parties was only the marked price of the shares? (iii) Whether in fact and circumstances of the case, the authorities below erred in ignoring the fact that the assessee was not doing any business in the company, he was merely drawing a salary and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of business assets. The Assessing Officer has referred to various clauses of the agreement, that transfer all pervasive control of business from the assessee to the purchaser, to the complete and absolute exclusion of the assessee. The Assessing Officer has also referred to a noncompete clause in the agreement while holding against the assessee. The findings so recorded, have been affirmed by the CIT (Appeals) as well as by the ITAT. It would, therefore, be necessary to reproduce a relevant extract from the order passed by the ITAT, but before doing so, it would be appropriate to point out that the essential dispute in the present case is whether transfer of shares by the assessee is transfer of a capital asset within the meaning of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss by the incoming company. The transaction entered into between the assessee before us as shareholder of M/s Excel Callnet Private Limited and the Mnaging Director of M/s Pugmarks Interweb Pvt. Ltd. was not merely for the transfer of shares of the company but was in fact transfer of management of the company to the purchaser with aq rider of non interference by the sellers who were the Directors of the company. Reference is made to the Article 2.1 of the agreement dated 26.3.2005 wherein the seller i.e. the assessee before us was refrained from day to day management of the business from the date of the agreement. In addition, the seller i.e. The shareholders of the company were to hand over the Employee Database, Products Database,m custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us of 100 K.ms from Chandigarh for a period of 2 years from the date of this agreement. Further non compete covenants imposed as restriction upon the seller Directors to directly or indirectly solicit a business that the company has done since its inception without prior written permission of the company. Under Article 8.10 there was renunciation of brand equity of the company by the seller will not take advantage of the brand equity of the company by using any names, logos, trademarks partnerships, affiliations, names etc. As per para 8.11 the sellers cannot use domains that contain the word Excel and would not use or claim the domain name w ww.Excel.netom . Article 9 of the agreement further refer to non solicitation of employees covenant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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