The case pertains to the taxability of compensation received by ...

Compensation for Terminating Beverage Contract Ruled Non-Taxable; Court Limits Disallowance of Raw Material Purchases.

October 5, 2024

Case Laws Income Tax HC

The case pertains to the taxability of compensation received by the assessee for termination of a contract. The key points are: The assessee received Rs. 4,30,88,084 as compensation for terminating a bottling contract with Hindustan Coca-Cola Beverages Pvt Ltd due to trade disputes. The Revenue contended that the amount was taxable u/ss 28(iv)/28(va) or 45, arguing it did not represent termination compensation exempt under Oberoi Hotels case. However, the Tribunal, after examining the settlement agreement and financial statements, upheld the CIT(A)'s finding that the source of income had ceased, making it a non-taxable capital receipt under Oberoi Hotels. Regarding disallowance of 20% of raw material purchases, the ITAT restricted it to 10%, observing that while the assessee must justify claims, the AO cannot make ad-hoc disallowances without scientific basis if documents are unavailable. The High Court upheld the ITAT's view.

View Source

← Previous Next →

The case pertains to the taxability of compensation received by ...

Compensation for Terminating Beverage Contract Ruled Non-Taxable; Court Limits Disallowance of Raw Material Purchases.

October 5, 2024

Case Laws Income Tax HC

You may also like:

Levy of service tax - Notice pay compensation - amounts received or recovered by the employer from its employees for resigning from the service - If the employer decides...

Characterization of receipt - Compensation receipt on termination of contract - Addition under Section 28(ii)(e) - The Tribunal differentiates between termination and...

The Advance Ruling Authority determined that the levy of GST on liquidated damages constitutes a supply of service under the Central Goods and Services Tax Act....

HC determined that the petitioner's challenge to contract termination by Union of India was untenable. The Corporate Debtor's business and assets were acquired by Mr....

Levy of GST - Supply or not - compensation amounts such as liquidated damages/trade settlement/damages collected from the customers for non-performing of contractual...

Special Economic Zones (2nd Amendment) Rules, 2018 - Sub-Contracting - Rule 41 amended.

Disallowance u/s 14A read with Rule 8D - the AO has not computed any disallowance under Rule 8D(2)(i) and Rule 8D(2)(ii) of the Rules and only under Rule 8D(2)(iii) of...

Eligibility of relief u/s 89 r.w. Rule 21A of I.T. Rules - Amount to be spread over the years including future years - compensation received by the assessee as only...

Assessment u/s 153A - Addition of undisclosed income - Contract between assessee and non-resident entity for sharing profits from supply of currency paper to RBI - No...

Sale of goods in the SEZ - works contract - Appellate authority has failed to appreciate the fact that it is not possible to abide by sub-rule (2A) of rule 42 of the...

Claim of the assessee u/s. 89 r.w. Rule 21A of I.T. Rules - The basis of compensation calculated by the company and the company also treated the one-time compensation as...

Classification of goods - non-alcoholic malt drink 'Kingfisher Radler' - the impugned product does not qualify to be a non-alcoholic beer, but it is a non-alcoholic...

Disallowance u/s 14A - disallowance u/r 8D was made of ₹ 2.19 Crores against total expenditure of ₹ 24.19 Lakhs - voluntarily disallowance by assessee of...

Termination of contract - non-performance of the contract - the termination of the contract was illegal and without following due procedure as required under the...

Assessee is getting the branded alcoholic beverages manufactured from different contract bottling units on contracts basis is Franchisee service and not Management...

Quick Updates: