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TMI Blog2016 (3) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... nue - Income Tax Appeal No. 910 of 2007 - - - Dated:- 5-2-2016 - M. S. Sanklecha And B. P. Colabawalla, JJ. For the Appellant : Mr. R.Murlidharan with Mr. A. K. Jasani For the Respondent : Mr. Ashok Kotangale with Mr. Arun Nagarjun and Mr. Arun Kumar Bagul, i/b. Ms. Anuradha Mane JUDGMENT ( Per M. S. Sanklecha J. ) This appeal under Section 260A of the Income Tax Act, 1961 (the Act) challenges the order dated 9th May, 2006 of the Income Tax Appellate Tribunal (Tribunal). This appeal relates to Assessment Year 200203. 2. This appeal was admitted on 22nd August, 2008 on the following substantial question of law: Whether on the facts and in the circumstances of the case, the finding of the Tribunal that the amount received by the Appellant was not in the nature of non-compete fees is perverse and/or contrary to the material on record and is given ignoring the documents in the Paper Book and overlooking the written submissions made by the Appellant? . 3. Briefly, the facts leading to the present appeal are as under: (a) On 31st March, 2002, the Appellant at the age of 81 years, retired from employment with M/s. Grasim Limited (Grasim). This wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-compete fees so as not to pay tax on the same. In the circumstances, the payment of Rs,3,80,48,100/was held to be not non-compete fees and was brought to tax under the head 'salary' and in particular, under Section 17(3)(ii) of the Act; (g) Being aggrieved, the Appellant carried the issue in appeal to the Commissioner of Income tax (Appeals) [CIT(A)]. By order dated 31st March, 2005, the CIT(A) found that the amount aggregating to ₹ 3,80,48,100/was received in installment of ₹ 2.00 Crore on 30th October, 2001, ₹ 30 lakhs on 20th February, 2002 and ₹ 1,50,48,100/on 27th March, 2002. All these amounts were received prior to date of Agreement dated 31st March, 2002. It further records that the payment of ₹ 2.00 Crorewas made on 30th October, 2001 was in fact an advance against non-compete fees/ exgratia, fees etc. Thus, he concluded that theagreement dated 31st March, 2002 indicating non-compete fees is the document which has been entered into so as to only hide the real nature of transaction. All this with a view to not pay legitimate tax on it. It was further held that the Appellant had retired from Grasim at the age of 81, having got bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade of ₹ 2.00 Crore could not be held to be payment for non-compete fees; In the result, the appeal of the Appellant was dismissed by the impugned order dated 9th May, 2006 while upholding the order dated 31st March, 2005 of the CIT(A). 4. Being aggrieved by the impugned order dated 9th May, 2006 of the Tribunal, this appeal has been filed to this Court. Mr. Murlidharan, learned Counsel appearing for the Appellant in support of the appeal submits as under: (a) The payment received as non-compete fees is not taxable in the subject Assessment Year as settled by the order of the Supreme Court in Guffic Chem P. Ltd. V/s. CIT 332 ITR 602; (b) The impugned order of the Tribunal relies upon six circumstances as set out herein above to conclude that the amount of ₹ 3,80,48,100/received by the Appellant is not non-compete fees. All the six circumstances either individually or collectively, would not result in the amount of ₹ 3,80,48,100/being classified anything as other then non-compete fees; (c) The amount of ₹ 3,80,48,100/if held to be not claimable as non-compete fees, then the authorities must hold under which head is the same classifiable. This n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. In the present facts, the Assessing Officer in his order dated 30th January, 2004 had held that the agreement dated 31st March, 2002 is not believable and the whole amount shown as payment for non-compete fees with Grasim is only a camouflage. This is particularly so in view of the failure of the Appellant to explain the manner in which the compensation arrived at an odd figure of ₹ 3,80,48,100/even when it is the case of the Appellant that it was a negotiated fees. The Appellant at no stage thereafter either before the authorities under the Act or even before us at the hearing of the appeal made any attempt to explain the circumstances in which the non-compete fees was negotiated at an odd figure of ₹ 3,80,48,100/. The submission of the Appellant that the figure of the compensation being odd or round, cannot by itself determine the character of the Appellant cannot be disputed. However, it is only one of the factors which the authorities have been relied upon to determine whether or not the amount of ₹ 3,80,48,100/is in fact a non-compete fee. In fact, the Appellant had claimed that an amount of ₹ 3,80,48,100/was arrived at after negotiations. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave the breakup of ₹ 2.00 Crore paid in advance on 30th October, 2001 and the amount thereof attributable to non-compete fees. Nor has the Appellant led any evidence from Grasim to show what quantum out of ₹ 2.00 Crore paid to the Appellant, is on account of non-compete fees. Thus, this factor is one more feature which leads to the view that it is improbable the payment was for non-compete fees as claimed by the Appellant. 11. Mr. Murlidharan, learned Counsel appearing for the Appellant next submits that the impugned order has incorrectly relied upon the fact that Grasim had deducted the TDS on the payment of non-compete fees of ₹ 3,80,48,100/made to the Appellant. The Appellant accepted the TDS without any protest. This itself evidences the fact that the Appellant accepts the fact that payment is not for non-compete fees. However, the Appellant submits that there can be no estoppel against statute. Therefore, even if Appellant itself agrees to the deduction of TDS by Grasim, yet it would not prevent the Appellant from urging that in law, the non-compete fees cannot be subjected to tax. There can be no quarrel with the above submission of the Appellant. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant has not been able to show that the finding of the Tribunal was in any manner perverse and/or arbitrary and/or contrary to the material available on record or arrived at over looking the submission made before them. In the circumstances, there is no warrant to interfere with the finding of the Tribunal. 15. It was submitted by Mr. Murlidharan that when the impugned order of the Tribunal has come to a finding that the amount of ₹ 3,80,48,100/is not a payment made for non-compete fees then it had to determine the character of ₹ 3,80,48,100/received by the Appellant. We need not dwell on this submission as it is not a question which had been framed at the admission of this appeal. Moreover in the present facts, the Assessing Officer in his order dated 30th January, 2004 has after negativing the Appellant's claim that ₹ 3,80,48,100/is a non-compete fee held that the same is classifiable as profit in lieu of salary under Section 17 of the Act. This determination by the Assessing Officer was not a subject matter of challenge by the Appellant before any of the appellate authorities. Thus, it is not an issue which even arises from the impugned order of the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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