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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 ..... 9;s income chargeable under the head "Long Term Capital Gains" and not under the head "other sources". 3) For that on the facts and in the circumstances of the case, the authorities below erred in not appreciating that Rs. 75 lacs was received by the assessee as a consideration for transfer of an intangible asset in favour of the company and therefore the said sum was chargeable under the head Long Term Capital Gain. 4) For that on the facts and in the circumstances of the case, the authorities below were also not justified in not allowing the appellant's claim for exemption u/s 54EC of the I.T Act since consideration was invested in specified capital asset. 5) For that the appellant craves leave to submit additional grounds and/ or amend or alter the grounds already taken either at the time of hearing of the appeal or before. 3. The facts of the case which can be stated quite shortly are as follows: The assessee filed return on income for assessment Year 2009-10 on 27.07.2009 declaring total income to the tune of Rs. 4,92,610/-. During the scrutiny proceedings, the AO noted that assessee has received an amount of Rs. 75,00,000/-, from one company, named M/s. Good Earth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record. Ld Counsel submitted before us that the assessee is an individual who is engaged in the business of mining of bauxite and other minerals under the name and style of M/s Ceramic Materials Co. For the relevant year, the assessee had filed a return of income declaring total income of Rs. 4,92,610/-. In the computation furnished along with the return of income, the assessee had reported to have received sum of Rs. 75,00,000/- on sale of his self generated goodwill which was deposited in the CGDS Scheme. The assessee had therefore computed gross Long Term Capital Gain at Rs. 75,00,000/- and claimed deduction of the equivalent amount deposited in the CGDS Scheme u/s 54EC of the Act. In the course of assessment the AO had required the assessee to furnish the details in connection with the sale of goodwill. In response the assessee explained that the sale consideration was received from M/s Good Earth Minment Pvt. Ltd. (GEMPL). It was submitted that the said company paid Rs. 75,00,000/- towards assessee's self generated goodwill on account of his experience in operation of mining companies and his credential of mining bauxite and other minerals in the state of Jharkhand. The AO h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horities to conduct mining, it is necessary for the bidder to have requisite credentials and past experience in the said field. Since M/s GEMPL was new in this field, it had approached the assessee to allow it to utilize his name, credentials and goodwill for its business of mining. The payer company had required the assessee to lend his name as also his credentials and therefore proposed that he be appointed as a Non-Executive Director with the sole purpose and intent to utilize his reputation and credentials for carrying out mining activities in the state of Jharkhand. After negotiations, the assessee had agreed to lend his name and permit it to utilize his credentials and therefore be appointed as a director on its Board for a lump-sum amount of Rs. 75,00,00/- towards his goodwill. On these facts it is therefore evidently clear that the payment in question was made by M/s GEMPL towards transfer of goodwill of Shri CM Gupta and nothing else. The ld Counsel submitted before us that the AO in his impugned order erroneously equated the payment towards goodwill with the right to conduct business and wrongly held that the fact that the assessee did not discontinue his proprietorship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the same is exigible to capital gains. We note that the decision of the Coordinate Bench of ITAT Chennai in the case of ACIT vs S.P. Sambandam (15 taxmann.com 388) involving similar facts as involved in the present case. In the decided case, the assessee who was an individual received sum of Rs. 1.35 crores from a company for permitting it to use his name 'S' as a part of the name of the company. The assessee was one of the promoters of the company and such sum was received in lieu of usage of his name when he was no longer in active management of the company. The assessee claimed that such receipt was in the nature of capital receipt and the transfer of partial right in his goodwill to the company amounted to transfer of a capital asset as defined in Section 2(14) and therefore offered the income under the head capital gain. The AO however assessed the receipt as income under the head 'other sources'. On appeal the CIT(A) upheld the contention of the assessee. Before the Hon'ble Tribunal the Revenue argued that the personal name of the assessee was not patented and there was nothing on record to suggest that he had generated goodwill in the market and therefore contended th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed in the paper book of the assessee. The correspondence between the company and the assessee as well as the requirement of no objection from the assessee from the Registrar's office to register the company's name shows that this word "Sambandam" had assumed colossal, commercial importance in the local market. The brand name is always treated as capital asset as defined in section 2(14) of the Act. The words used in section 55(2)(a) were "the cost of acquisition in relation to a capital asset, being goodwill of a business or a trade mark or a brand name associated with a business". That definition makes this word "Sambandam" a brand name associated with business of the company and this brand name has been transferred from the individual to the company during the year. Even if the assessee continues to use his name for his personal purposes hut allow use of the name in the company as per the correspondence between them, although there is a rider the assessee can withdraw this benefit when, in future, in our opinion, the transfer of partial right is exigible to capita! gains. Thus, the consideration was received in respect of right transferred that too on the basis of val ..... X X X X Extracts X X X X X X X X Extracts X X X X
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