9911796707
TMI Blog1980 (4) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... 00. This amount consisted of two parts, namely Rs. 1,80,000 towards the goodwill of the business sold and the balance of Rs. 2,00,000 represented the consideration paid to the vendor for his agreeing to refrain from setting up similar business. 2. The case of the assessee before the ITO was that the sum of Rs. 1,80,000 was not liable to capital gains tax in view of the decision in the case of B.C. Srinivasa Shetty (1974) 96 ITR 667 (Kar). Regarding the sum of Rs. 2 lakhs it was contended that the amount did not represent the profit and gains arising from the transfer of capital assets and hence not liable for capital gains tax. The ITO did not agree with this contention and assessed the sum of Rs. 3,45,390 being the net sale proceeds aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of the Revenue authorities. 4. We have considered the contentions of both the parties as well as the facts on record. We find that goodwill is a self-generated asset and so no capital gains arises therefrom as has been held in the case of CIT vs. Home Industries Co. 1977 CTR (Bom) 238: (1977) 107 ITR 609 (Bom). Regarding the amount received towards the transfer of the tenancy rights back to owner, we find that the same is covered by the decision cited before us by the ld. Representative for the assessee. There is no dispute that the assessee had not spent anything to acquire the tenancy rights. Respectfully following the aforesaid authorities we hold that the amount under consideration was not liable to capital gains tax. We d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised the fact that the matter was still under dispute and was not finally settled against the assessee during the year under consideration and so was not available. 7. We have considered the contentions of both the parties as well as the facts on record. We find that the assessee followed the mercantile system of accounting. The amount under consideration was not paid during the previous year. Even so, it will be admissible if the liability to pay the same accrued during the year. We agree that the necessity to pay the amount arose out of the business carries on by the assessee. However, that alone is not enough for allowing the loss. It must be established that the loss arose during the year under consideration. The burden to do so lies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot incidental to the carrying on of the assessee's business, or in the alternative it was spent on capital account. 9. Shri V.H. Patil, urged before us that the disallowance was not justified. He stated that the presence of the unauthorised persons around the factory was a nuisance and the amounts spent was an expense for the preservation of the asset of the assessee. He stated that the persons were occupying the land contiguous to the land of the factory but inside the compound wall. 10. Shri G.S. Bhargava, on the other hand, supported the order of the Commissioner. He pointed out that the land under consideration was not a part of the factory land and so it could not be said to have been spent for the protection of an existing asset ..... X X X X Extracts X X X X X X X X Extracts X X X X
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