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TMI Blog2018 (11) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... n law and the fact and circumstances of the case in confirming certain additions of the order of the learned ACIT 11(1) Mumbai. 2. The learned CIT(A) has erred, in law and facts and circumstances of the case in considering the Capital receipt of Rs. 95,00,000/- received from M/s. Coca Cola India Ltd. as income liable to tax. The appellant respectfully submits that the additions of this sum may kindly be deleted. This is second round of appeal since the matter, in the first round, was set aside by the Tribunal to the file of Ld. CIT(A) with certain directions. Pursuant to the aforesaid directions, the matter has been reconsidered by first appellate authority wherein certain quantum additions as made by Ld. AO have been confirmed against which the assessee is under appeal before us. 2.1 Facts germane to the issue are that the assessee [hereinafter referred to as 'SS'] being resident individual is a film actress by profession. The assessee was assessed in scrutiny assessment u/s 143(3) on 11/12/2006 by Ld. Assistant Commissioner of Income Tax- Circle 11(1), Mumbai [in short referred to as 'AO'] at Rs. 258.91 Lacs after certain additions as against returned income of Rs. 157.54 L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inion, is duly empowered to set aside the same with a direction to the ld. CIT(A) to make the same afresh in accordance with law after complying with the said Rule. We, therefore, set aside the impugned order of the ld. CIT(A) and restore the matter to his file with a direction to dispose of the appeal of the assessee afresh in accordance with law after complying with the requirements of Rule 46-A. Upon perusal, it emerges that the matter was set aside to the file of Ld. CIT(A) primarily in view of the fact that additional evidences were considered by the first appellate authority in violation of Rule 46A. 2.3 Pursuant to the aforesaid directions of the Tribunal, the matter was reconsidered by the Ld. first appellate authority vide impugned order dated 24/03/2015 wherein additional evidences submitted by the assessee were remanded to Ld. AO. The remand report was furnished by Ld. AO on 22/12/2014, the contents of which have been extracted at para 4.3.1 of the impugned order wherein Ld. AO opined that the amount of Rs. 145 Lacs received by the assessee was in lieu of settlement between the two parties for breach of terms of celebrity engagement contract [in short 'Commercial Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come from Other Sources". The appellant has been receiving business and profession income by way of fees for acting assignments in various films, stage shows in India and abroad and various commercial endorsements. During the F.Y.2003-04 relevant to A.Y.2004-05, the appellant had received a sum of Rs. 1.45 crores from M/s. Coca Cola India Ltd. in terms of Clause-2 of the Settlement Agreement dated 18.09.2003. The relevant Clause-2 of the Settlement Agreement dated 18.09.2003 may be reproduced as under:- "2. Coca-Cola agrees to pay to SS, on or before signing of this agreement, a sum of Rs. 1,45,00,000/- (Rupees One Crore Forty-Five Lacs only) as compensation, without admission of liability, towards SS's alleged claims against Coca-Cola arising out of, or in relation to the Celebrity Agreement, and subsequent termination thereof as hereinabove stated. The said amount shall be accepted by SS in full and final settlement for all her claims against Coca-Cola arising out of or in relation to the Celebrity Agreement and the subsequent termination thereof, and SS confirms that she has no claim of whatsoever nature against Coca-Cola." 5.2.2.2 Whereas, the appellant had received t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of the receipt under the general law that determines its nature for the purpose of the act but the receipt would have to be considered under the provisions of the act from the commercial point of view. Strong reliance is placed on the Hon'ble Bombay High Court decision in the case of CIT vs. Scindia Workshop Ltd. (1979) 119 ITR 526, 531 (Bom). Therefore, from the commercial point of view, such receipt of Rs. 1.45 crores is a revenue receipt that arose by way of termination of commercial contract (Celebrity Agreement) and by way of Settlement Agreement dated 18.09. 2003. Hon'ble Supreme Court in the case of CIT vs. Panbari Tea Company Ltd. (1965) 57 ITR 422, 425 (SC) has held that the nomenclature used may not be decisive but it helps the court, having regard to the other circumstances, to ascertain the intention of the parties. Hon'ble Allahabad High Court in the case of Seth Banarsi Das Gupta Vs. CIT (1971) 81 ITR 170 (All) has held that the amount received by the assessee under a compromise decree, in a suit for setting aside the lease was a revenue receipt. Similarly, in the case of United Construction Contractors vs. CIT (1994) 208 ITR 914, 919-20 (Ker). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties of CCIL for various products. The manner of rendering services, procedure thereof, schedules etc. have also been provided under the said Clause-3. In terms of Clause-7, the assessee was entitled for aggregate payment of Rs. 150 Lacs payable in the following manner:- No. Amount (Rs.) Schedule of Payment 1. Rs.75 Lacs Within 10 days of signing the agreement 2. Rs.25 Lacs On completion of 8 days or 01/06/2002 3. Rs.25 Lacs On completion of 15 days or 30/12/2002 4. Rs.20 Lacs On completion of 23 days or 01/06/2003 5. Rs.5 Lacs On completion of 30 days or 30/12/2003 Total Rs.150 Lacs The eventuality of defaults and consequences thereof has been provided under Clause-9, which reads as follows:- Default and its Consequences: At any time during the Term: a) should Sushmita fail to fulfill any of her obligations hereunder for a period of fifteen (15) days from the date of notice from Coca-Cola to fulfill her commitments hereunder, fails to comply with the terms of such, Coca-Cola shall have the right to terminate this Agreement forthwith without payment of any further compensation and shall be entitled to pro rata refund of all moni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Refund Due from SS 1.45 Crores 4.3 In response to aforesaid termination, the assessee, through its solicitors' firm M/s Bachubhai Munim & Co., issued a legal notice dated 07/04/2004 to Doughlas N.Daft, Chairman of CCIL, USA & Alex Von Behr, President & CEO of CCIL, India wherein the assessee while disputing the termination of the contract alleged that the termination was mala-fide and dishonest and was for the collateral and illegal purpose to punish the assessee since she rightly resisted the sexual harassment by an employee of CCIL in the course of discharge of his duties. It was further stated that the assessee held CCIL and its USA based parent company liable for all the consequences flowing from the assessee being made a victim of sexual harassment by an employee of CCIL and for having failed to discharge its statutory duty of providing the assessee with a safe work place environment protected from sexual harassment. In the said notice, the assessee claimed the balance sum of Rs. 50 Lacs due to her under the contract and specifically reserved her right to claim the damages arising out of her being sexually harassed for having disparaged her well established professional rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. The allegations on the basis of which the Agreement is purported to be terminated are false and without any basis. The allegations of gross negligence and willful conduct ascribed to Ms.Sen, are malicious, and irresponsible and are clearly defamatory and are made with the intent to willfully cause injury to her reputation and her calling as an artist knowing full well that the allegations are false. ***** 10. The above mentioned facts only go to establish what is stated at the outset of this letter that the only motive and purpose for the extreme step of purported termination, which otherwise is totally baseless and of no effect, is to drive Ms. Sen to go to the delinquent employee and fall a victim to his unwelcome sexually determined behavior and demands. 11. Whilst reserving her right to claim damages including those arising out of her being "Sexually Harassed", for having disparaged her well established professional reputation by false, malicious and defamatory allegations of gross negligence and willful conduct and for the repudiatory breach of contract by the Company we on behalf of our client demand of Coca Cola Company the payment of the balance of her remune ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be received for loss of reputation etc. under the circumstances as discussed by us in the preceding paragraphs and therefore, being capital in nature, claimed to be not taxable. The factual matrix leads us to believe so in view of the fact that the contract did not envisage any additional payment over and above the amount of Rs. 150 Lacs to the assessee. The perusal of documents leads us to believe that the said compensation did not accrue / arise out of exercise of profession by the assessee and could not be construed to be the income of the assessee or profits and gains of profession within the meaning of Section 2(24) and Section 28 of the Income Tax Act, 1961. The compensation could not be termed as any benefit, perquisites arising to the assessee out of exercise of profession. The Ld. first appellate authority, in our opinion, fell in error to adjudicate the same on the threshold of impact of the compensation on profit making apparatus without understating the true nature of the receipts. This being so, we have no hesitation in deleting the impugned addition of Rs. 95 Lacs. We order so. 4.7 The Ld. AR, during the course of hearing, had canvassed that the compensation re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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