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TMI Blog2019 (12) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... capital asset and liable to tax under the head capital gain. Therefore, we direct the Assessing Officer to assess the goodwill under the head capital gain. - Decided in favour of assessee. - ITA No.1282/Kol /2013 - - - Dated:- 23-10-2019 - Shri S.S. Godara, JM And Dr. A.L. Saini, AM For the Assessee : Shri AkkalDudhwewala, FCA For the Respondent : Shri Sanjay Mukherjee, Addl. CIT ORDER PER DR. A. L. SAINI: The captioned appeal filed by the assessee, pertaining to assessment year 2009-10, is directed against the order passed by the Commissioner of Income Tax (Appeal)-XIV, Kolkata, in appeal No.678/CIT(A)-XIV/Kol/11-12, dated 14.03.2013, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (in short the Act ) dated 25/10/2011. 2. Grounds of appeal raised by the assessee are as follows: 1) For that on the facts and in the circumstances of the case, the CIT(A) was not justified in upholding the AO's order of assessing ₹ 75 lacs as income chargeable under the head other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. that Sri. Chandra Mohan Gupta, the assessee, had no educational qualification in the field of mining. It was also found that none of the other Directors who were appointed during the same period, had been paid any goodwill. Thus, the assessing officer found that there had not been any transfer of any asset by the assessee. Accordingly, the receipt in the hands of the assessee is not assessable under the head capital gain. But assessable under the head income from other sources.Therefore, the receipts of ₹ 75,00,000/- was treated by AO in the nature of Revenue Receipt chargeable to tax and not in the nature of capital receipt. 4. Aggrieved by the stand so taken by the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the action of the Assessing Officer. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. 5. The ld. Counsel for the assessee has relied on the submissions made before the authorities below. On the other hand, the ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther observed that M/s GEMPL had claimed this payment by way of revenue expenditure and therefore, held that the receipt was revenue in nature in the hands of the assessee. The AO also concluded that since the receipts did not classify as income under any of the specified heads of income contained in Chapters IVA IVE of the Act. Accordingly AO assessed it under the residuary head i.e. income from other sources. 7. The Ld Counsel submits before us that the lower authorities grossly erred in not correctly appreciating the jurisdictional facts of the case and erroneously assessed the receipt of ₹ 75,00,000/- on transfer of goodwill to M/s GEMPL under the head Other Sources. Attention in this regard is invited to Pgs 1-9 of the Paper Book which contain the correspondence/ communication between the assessee and GEMPL regarding transfer of goodwill. On perusal of the same and having regard to the jurisdictional facts it is an admitted lact that the assessee was engaged in the business of mining of bauxite for more than 40 years in the state of Jharkhand. In the circumstances it cannot be denied that the assessee has not only developed credential re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red ( that is, allowed the company to use his name and reputation) his name and goodwill to M/s GEMPL which is a separate and independent capital asset in itself. 8. The ld Counsel also submits before us that the AO s conclusion that the payment in question was revenue and not capital in nature was erroneously influenced by the purported fact that M/s GEMPL had claimed it to be a revenue expenditure. It is by now well settled in law that the manner in which the payer records the payment in his books of account is inconsequential and indecisive to determine the nature and character of such receipts in the hands of the payee. If a wrong claim or wrong entry has been passed by the payer it will not result in an adverse inference in the hands of the payee. What is relevant is the nature and character of receipt in the payee s hands and not the treatment of such payment in the books of the payer. Undeniably, goodwill is a recognized capital asset which can be self-generated and also transferred for valuable consideration. We note that the Hon ble Supreme Court in the case of CIT v. Smifs Securities Ltd. (210 taxman 248) has held that goodwill is in the nature of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. We have heard rival submissions and have carefully perused the entire records. The vehement submission off he learned Departmental representative is that Sambandam is not a patent name and it has not been proved on record that this name has earned ''goodwill in the market and much less there was no dispute between the parties and no court has given any such direction. It was further argued that what has been transferred by the assessee and the time when the same had been transferred were not evidenced in the record. Therefore, section 45 of the Act is not applicable. 4 . On the other hand, the learned authorized representative has heavily relied on the assessee finding and further submitted that the name Sambandam has assumed ominous importance in the commercial sense as the correspondence between the parties which has been referred to the above clearly shows that this name has assumed the status of an intangible asset . According to the learned authorised representative, if one customer goes into market and asks the shopkeeper that he wants Sambandam . he would immediately understand he wants yarn with the name Sam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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