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TMI Blog2013 (10) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... aser) did not show the amount of Rs.24.00 lakhs as good will, yet AO did not make any enquiry in that regard with the partnership firm. Generally, the nature of payment could be determined by examining the agreement entered between two parties. In the instant case, there is no discussion about the existence of agreement, if any, towards payment of Rs.24.00 lakhs to the assessee - even if it is considered that the assessee did not receive the amount of Rs.24.00 lakhs towards good will, the said amount should be considered as having been received only towards transfer of land and building, in which case also, the above said amount of Rs.24.00 lakhs is liable to be taxed as Long term capital gain only - there is no reason to suspect the claim of the assessee that he received the amount of Rs.24.00 lakhs towards good will. - Decided in favour of assessee. Taxability of amount received towards transfer of Bar Licence - Held that:- Even though the partnership deed states that all the assets of the erstwhile proprietary concern shall become the proprietary of the partnership firm, what is relevant for the purposes of taxation in the hands of the assessee herein is the nature and quan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereon. The AO, however, treated the same as revenue receipt and subject it to tax at normal rates. The assessee had also received a sum of Rs.18.00 lakhs as compensation towards the bar licence fee paid by him in advance for the financial year 2006-07. The assessee did not offer the same for taxation on the plea that it was only reimbursement of amount already paid by him in advance. The AO, however, brought the same to tax. Aggrieved, the assessee carried both the matters in appeal filed before Ld CIT(A). 5. In the appellate proceedings, the Ld. CIT(A) confirmed the decision of the Assessing Officer in assessing the goodwill amount of Rs. 24.00 lakhs as revenue receipt. The ld CIT(A), however, deleted the addition of Rs. 18.00 lakhs relating to bar licence fee by accepting the contention of the assessee. Aggrieved, both the parties are in appeal before us on the issues decided against each of them. 6. We shall first take up the appeal filed by the assessee. The assessee has challenged the re-opening of the assessment on the ground that the assessment has been re-opened by the AO on mere change of opinion. In this regard, the ld A.R placed reliance on host of case laws. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view entertained by the Assessing Officer that the goodwill amount has to be assessed as revenue receipt was on account of mere change of opinion. 9. We have already noticed that the assessment was re-opened on two reasons. With regard to the second reason, viz., taxability of Rs.18.00 lakhs received towards bar licence fee, we do not find any type of discussion in the assessment order. No material was placed before us to show that the AO did apply his mind on the above said issue. Hence, the question of change of opinion does not arise at all on this issue. 10. In view of the foregoing discussions, in our view, the Ld CIT(A) was justified in upholding the validity of reopening of the assessment. 11. The next issue relates to the assessment of Good will amount of Rs.24.00 lakhs as revenue receipt. As stated earlier, the assessee sold his proprietary business to a partnership concern and received following amounts as consideration. Sale proceeds of land and building as per registered document - 90,00,000 Goodwill (premium for licence) - 24,00,000 Amount received for Bar licence fee -- 18,00,000 1,32,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot show the amount of Rs.24.00 lakhs as good will, yet we find that the AO did not make any enquiry in that regard with the partnership firm. Generally, the nature of payment could be determined by examining the agreement entered between two parties. In the instant case, there is no discussion about the existence of agreement, if any, towards payment of Rs.24.00 lakhs to the assessee. 15. According to the assessee, he was carrying on the business since 1981 and further the bar licence also commands premium and hence he has generated good will over the years and received the above said amount of Rs.24.00 lakhs as compensation for the same. Since it was self generated one, the assessee did not claim any amount towards cost of acquisition. The assessee could have substantiated his claim by producing any material. Be that as it may, what was transferred was a business along with the land and building and "Bar licence". There is no dispute with regard to the fact that the said business was continued to be carried on at the same place with the same bar licence by a partnership firm. The fact that the assessee herein was carrying on the said business since 1981 in that location is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs relating to Bar licence fee. According to the assessee, the annual bar licence fee was Rs.18.00 lakhs and the same is required to be paid to the Excise department before the commencement of the financial year. Accordingly, the assessee paid the amount of Rs.18.00 lakhs for the financial year 2006-07 in the month of March, 2006 itself. While transferring the business to the partnership firm, the assessee received the above said amount as reimbursement from the newly formed partnership firm. Since there is no income element involved in it, the assessee did not offer the same as his income. The AO took the view that the amount of Rs.18.00 lakhs has to be treated as a part of compensation for converting proprietary business of the assessee into a firm. The AO also made a reference to clause 4 of the partnership deed, wherein it is mentioned that all the assets of the erstwhile proprietary business shall become the property of the firm and no liability of the erstwhile business is taken over by the firm. Accordingly, the AO took the view that the advance licence fee of Rs.18.00 lakhs has automatically became the asset of the partnership firm and hence the above said amount is taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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