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TMI Blog2003 (5) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... td. (in short GKW) in an agreed sum of Rs. 844.88 lakhs. As per assessee, Rs. 3 crores was a capital receipt which do not represent any consideration for transfer of any capital asset. Therefore, the same was not liable to be assessed under the head 'capital gains'. Accordingly, the assessee de-acquisition of the assets, which is Rs. 44.88 lakhs, is a short-term capital gain liable to tax. 6. Aggrieved by the above order of Assessing Officer, the assessee approached to the ld. CIT(A) and submitted that the assessee has incurred expenditure for prospecting, project and feasibility report, purchase of vehicles, furnitures, etc. over a period of time ranging from financial years 1992-93 to 1994-95. The entire expenses incurred on tangible assets were reimbursed by the buyer company and no element of profitability was envisaged in the same. It was also submitted that what was transferred by the assessee for consideration of Rs. 3.00 crores was a bundle of intangible assets and there was no cost of acquisition for acquiring these rights. 7. By the impugned order, the ld. CIT(A) observed that no doubt a completed and commissioned plant is a tangible asset. But to reach that stage, fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. CIT(A). 11. We have heard the rival contentions, gone through the orders of the authorities below and carefully perused the paper book filed by the ld. A.R. We had also deliberated upon the judicial precedents cited by the ld. representatives of both the parties in the context of factual matrix of the case before us. From the record, we find that the assessee was planning to set up a Cement Project in Rajasthan. To achieve this object, the assessee has spent money for obtaining Letter of Intent from the Industry Ministry, Government of India, carried out detailed prospecting work under guidance of one expert organisation, obtained sanction of Rajasthan Government for grant of mining lease, obtained approval for electricity connection from Rajasthan State Electricity Board, obtained surface rights in respect of 320 hectres of land, obtained approval from Government of Rajasthan for acquisition of 110 acres of land, obtained clearance from Department of Environment and submitted a Management Plan Report regarding impact of pollution for setting up the factory, engaged the services of experts for preparation of Feasibility Report etc. For getting all these works done, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xt may require, it signifies every possible interest which a person can acquire, hold or enjoy. According to Stroud's judicial dictionary of the words and phrases (6th edition), 'property' is a comprehensive term indicative of every possible interest which a party can have. In view of the wide meaning of the expression 'capital asset' in section 2(14) and 'property' as understood in its ordinary wide connotation, there is no hesitation in holding that the bundle of rights/permissions, tangible and intangible assets acquired by the assessee in respect of the Cement Plant to be set up in Rajasthan was a capital asset. There is also no much substance in the contention of the ld. counsel for the assessee that conceptually there is no cost of acquisition which could be attributable to the various rights/licences, etc. acquired by the assessee. It is equally difficult to accept that the date of acquisition of various rights/privileges/licences/tangible or intangible assets is not known. The dates and cost of components constituting various rights, privileges proposed to be transferred to GKW vide agreement dated 30-8-1995, are definitely known and all these costs have been properly recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee are not the assets which are having spontaneous growth by nature. The acquisition of these rights also entails the cost which has actually been incurred by the assessee. In the case of Voltas Ltd v. Dy. CIT [1998] 64 ITD 232 (Mum.) held that "amount" received in consideration of transferring trade name which is well known all over the country and has acquired popularity amongst masses to one of its joint-owner is a capital receipt. 13. Similarly, the judgment relied on by the ld. A.R. in case of CIT v. Kaikobad By ramji Sons [1989] 179 ITR 569, the Hon'ble Supreme Court held that where the business of a firm is transferred to a Company and no goodwill amount was paid on such transfer by transferee to the transferor assessee, no capital summarises on such transaction to the transferor assessee. Whereas in the instant case, the rights, privileges, etc. have been transferred at a consideration of Rs. 844.88 lakhs. Thus all these cases relied on by the ld. AR. are of no much help to the assessee. 14. Unlike the cases relied on by the ld. AR. pertaining to goodwill and tenancy right in respect of which cost of acquisition/improvement was incapable of computation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account and in the agreement, spelt up the price according to his convenience, one part was related to the intangible assets and their benefits, and the other part related to transfer of tangible assets and benefits arising out of various expenses incurred by the assessee on actual reimbursement basis. This mention in the agreement does not appear to be decisive of the matter in controversy. The question is not whether the parties had actually fixed a definite price for the transfer and acquisition of assets, but the question is whether the asset could be said to be one in respect of which no cost of acquisition could at all be envisaged or conceived. Unlike goodwill it is not possible to show that no cost of acquisition can shall be conceived or envisaged in respect of capital asset transferred by the assessee to GKW. Transfer of various rights, privileges, tangible and intangible assets to GKW were the potential source for capital receipts of Rs. 844.88 lakhs. Only by incurring various expenditure as detailed in the books of account, the assessee has been able to obtain various permissions, licenses, approvals, etc. The total consideration paid by GKW was basically towards ri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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