DCIT, New Delhi v. M/s. JHPL Holdings Pvt. Ltd, New Delhi

ITA 4720/DEL/2009 | 2002-2003
Pronouncement Date: 04-03-2011 | Result: Allowed

Appeal Details

RSA Number 472020114 RSA 2009
Assessee PAN OFTHE1922A
Bench Delhi
Appeal Number ITA 4720/DEL/2009
Duration Of Justice 1 year(s) 2 month(s) 21 day(s)
Appellant DCIT, New Delhi
Respondent M/s. JHPL Holdings Pvt. Ltd, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 04-03-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted D
Tribunal Order Date 04-03-2011
Date Of Final Hearing 01-02-2011
Next Hearing Date 01-02-2011
Assessment Year 2002-2003
Appeal Filed On 14-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D DELHI BEFORE SHRI I.P. BANSAL AND SHRI K.G. BANSAL ITA NO. 4720(DEL)/2009 ASSESSMENT YEAR: 2002-03 DEPUTY COMMISSIONER OF M/S JH PL HOLDINGS PVT. LTD. INCOME-TAX CIRCLE 4(1) VS. D-19 NIZAMUDDIN EAST NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. MONGA DR RESPONDENT BY : SHRI SALIL AGGARWAL ADVOCATE ORDER PER K.G. BANSAL : AM THE SOLITARY GROUND TAKEN BY THE REVENUE IS TO T HE EFFECT THAT THE LD. CIT(APPEALS) ERRED IN DELETING THE ADDITION OF R S. 48 64 490/- MADE BY THE AO BY TREATING TRADING SETTLEMENT AMOUNT REC EIVED AS REVENUE RECEIPT AS AGAINST THE CAPITAL RECEIPT CLAIMED BY THE ASSESSEE. 2. THE FACTS AS MENTIONED IN THE ASSESSMENT ORD ER ARE THAT THE RETURN WAS FILED ON 29.10.2002 DECLARING LOSS OF RS. 14 95 640/-. IN THE COURSE OF SCRUTINY OF THE CASE IT WAS FOUND THAT THE ASS ESSEE-COMPANY CREATED CAPITAL RESERVE OF RS. 48 64 490/-. IN THIS CONNEC TION IT HAS BEEN MENTIONED THAT ON 19.03.1996 THE ASSESSEE AND OTHER MEMBERS OF JAIN ITA NO. 4720(DEL)/2009 2 GROUP ENTERED INTO A JOINT VENTURE AGREEMENT W ITH GILLETTE INDIA PVT. LTD. (GIPL) TO JOINTLY POOL THEIR RESOURCES AND S TRENGTHENS TO CARRY ON THE BUSINESS OF MANUFACTURING AND MARKETING THE WR ITING INSTRUMENTS AND STATIONERY PRODUCTS IN INDIA. IT WAS UNDERSTOO D THAT THE JOINT VENTURE COMPANY LUXOR WRITING INSTRUMENTS LTD. (LWIL) SHALL BE THE VEHICLE THROUGH WHICH THEY SHALL CARRY ON THE AFORESAID BUSINESS IN INDIA UNDER LUXOR AND PARKER TRADE MARKS. IT WAS AGR EED AMONGST THE PARTIES THAT THEY WILL NOT SELL TRANSFER ETC. THEIR INT ERESTS IN LWIL. HOWEVER IN THE YEAR 2000 GILLETTE GROUP DECIDED TO SE LL ITS WORLD WIDE BUSINESS OF WRITING INSTRUMENTS INCLUDING ITS SHAREHOLDI NG IN LWIL TO NEWELL RUBBERMAID INC. USA (NEWELL). IN PURSUANCE OF THI S DECISION GILLETTE GROUP NEWELL AND JAIN GROUP ENTERED INTO A ADD ENDA TO JOINT VENTURE AGREEMENT WHEREBY NEWELL AGREED TO ACQUIRE T HE SHAREHOLDING OF GILLETTE IN LWIL I.E. IT DECIDED TO STEP INTO T HE SHOES OF GILLETTE AND HONOUR ALL RIGHTS AND OBLIGATIONS OF GILLETTE AR ISING ON ACCOUNT OF AGREEMENT DATED 19.3.1996. IN APRIL 2001 NEWE LL SOUGHT PERMISSION FROM GOVERNMENT OF INDIA FOR PURCHASE OF SHARES OF THE GILLETTE WHICH WAS GRANTED. HOWEVER NEWELL DID NOT PROCEED WITH THE TRANSFER OF SHARES FROM GILLETTE TO ITSELF. IN NOVEMBER 2001 THE ASSESSEE WAS INFORMED THAT NEWELL HAS DECIDED NOT TO GO AHEA D WITH THE ACQUISITION ITA NO. 4720(DEL)/2009 3 OF SHARES OF LWIL AND WOULD NOT BECOME PARTY TO THE JOINT VENTURE AGREEMENT DATED 19.3.1996 IN PLACE OF GILLETTE GROUP. THE ASSESSEE PERMITTED NEWELL TO WITHDRAW FROM THE AGREEME NT AND ALL OBLIGATIONS ARISING THEREUNDER INCLUDING ACQUISITION OF SHA RES OF GILLETTE GROUP. THE GILLETTE ALSO WANTED TO EXIT FROM THE JOINT VE NTURE. AS A CONSEQUENCE OF THIS RE-ARRANGEMENT THE NEWELL PAID THE AFORE SAID AMOUNT TO THE ASSESSEE. THE CASE OF THE ASSESSEE BEFORE THE A O WAS THAT THE RECEIPT WAS CAPITAL IN NATURE NOT LIABLE TO TAX IN VIEW OF THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. J. DALM IA (1984) 149 ITR 215. 2.1 THE AO CONSIDERED THE FACTS OF THE CASE AN D SUBMISSIONS MADE BEFORE HIM. HE REFERRED TO THE CONDITION PRECEDE NT MENTIONED ON PAGE 4 OF THE AGREEMENT AMONGST GILLETTE GROUP NEWELL AND JAIN GROUP TO THE EFFECT THAT ASSIGNMENT HEREUNDER SHALL BECOME EFFECTIVE UPON THE TRANSFER OF SHARES HELD IN LWIL BY THE ASSIGNER TO THE ASSIGNEE AND/OR ITS NOMINEE(S) BEING A WHOLLY OWNED SUBSIDIARY IN INDIA AND/OR OUTSIDE INDIA OF THE ASSIGNEE. ON THE BASIS OF THIS NAR RATION IT IS HELD THAT THE AGREEMENT WILL COME INTO FORCE ONLY WHEN SHARES ARE TRANSFERRED BY THE GILLETTE GROUP TO NEWELL. THIS CONDITION HAS NEVER BEEN FULFILLED. THE REASON STATED BY THE ASSESSEE IS THAT JAIN GROU P RAISED SEVERAL ITA NO. 4720(DEL)/2009 4 OBJECTIONS AND THAT GILLETTE AND NEWELL THREAT ENED WITH LEGAL ACTION SOUGHT SETTLEMENT OF DISPUTES SUCH AS SUITABLE RELIEF INCLUDING SPECIFIC PERFORMANCE OF RIGHTS AND OBLIGATIONS UNDER AGRE EMENT DATED 19.3.1996. THEREAFTER AN OUT OF COURT SETTLEMENT WAS ARR IVED AT UNDER WHICH NEWELL INTER-ALIA AGREED TO PAY THE AFORESAID S UM TO THE ASSESSEE FOR AGREEING TO RELEASE AND WITHDRAWAL OF ALL CLAIM S BY THE ASSESSEE. SIMILARLY PAYMENTS OF DIFFERENT AMOUNTS WERE MA DE TO MEMBERS OF JAIN GROUP. THIS ARGUMENT WAS NOT ACCEPTED AS IN TH E FIRST PLACE THERE WAS NO BASIS ON WHICH THE ASSESSEE OR JAIN GROUP COULD FILE LEGAL SUIT AGAINST NEWELL. IT IS FURTHER MENTIONED THAT THERE HAS BEEN NO TRANSFER OF ANY CAPITAL ASSET AS THE RIGHT TO SUE IS NOT A TR ANSFERABLE RIGHT. THUS THE AMOUNT RECEIVED IS UNDER A COMPROMISE OR AMICAB LE SETTLEMENT WHICH IS IN THE NATURE OF PROFIT IN VIEW OF THE DECISION OF APEX COURT IN THE CASE OF SETH BANARSI DAS GUPTA VS. CIT (1987) 166 ITR 783. RELIANCE HAS ALSO BEEN PLACED ON THE DECISION IN THE CASE OF CIT VS. BEST & CO. PVT. LTD. 60 ITR 11 (SC) IN WHICH IT WAS HELD T HAT WHERE COMPENSATION IS RECEIVED FOR LOSS OF AN ENDURING ASSET IT WOULD BE A CAPITAL RECEIPT BUT WHERE IT IS RECEIVED IN THE ORDINARY COURSE OF BUSI NESS IT SHALL BE A REVENUE RECEIPT. FINALLY IT WAS HELD THAT NO INJURY HAS BEEN CAUSED TO THE CAPITAL STRUCTURE OF THE ASSESSEE THEREFORE THE RECEIP T IS REVENUE IN NATURE. ITA NO. 4720(DEL)/2009 5 ACCORDINGLY THE AMOUNT WAS ADDED TO THE TOTAL I NCOME WHICH WAS COMPUTED AT RS. 33 68 850/-. 3. IN REPLY THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PARAGRAPH NO. 4.4 OF THE IMPUGNED ORDER. IT IS MENTIONED TH AT THE MEMBERS OF JAIN FAMILY THE ASSESSEE AND THE GIPL WERE CARRYIN G ON THE BUSINESS OF MANUFACTURE AND SALE OF WRITING INSTRUMENTS AND STATIONERY IN INDIA UNDER THE JOINT VENTURE AGREEMENT DATED 19.3.1996 BY FORMING A COMPANY KNOWN AS LWIL. THIS COMPANY HAS BEEN REGULARLY ASSESSED TO TAX SEPARATELY. IN THE YEAR 2001 GILLETTE COMPANY INC. USA THE HOLDING COMPANY OF GIPL SOLD ITS WORLD WIDE BUSINESS OF WRITING INSTRUMENTS TO NEWELL AND AS A PART OF THIS TRANSACTION THE SHAREHOLDING IN GIPL WAS ALSO SOUGHT TO BE TRANSFERRED TO THE NEWELL. IN THIS CONNECTION VARIOUS AGREEMENTS WERE EXECUTED ON 17.1.2001 ACCORDIN G TO WHICH AN ASSIGNMENT AGREEMENT WAS ENTERED INTO BETWEEN GIPL NEWELL JAIN FAMILY AND JHPL. THE SHARE HOLDING OF GIPL W AS SOUGHT TO BE TRANSFERRED TO NEWELL WITH THE CONCURRENCE OF MEM BERS OF JAIN FAMILY AND JHPL. NEWELL WAS GRANTED APPROVAL BY THE MINIS TRY OF COMMERCE AND INDUSTRIES FOR ACQUIRING THESE SHARES. HOWEVER NEWELL EXPRESSED ITS UNWILLINGNESS TO ACQUIRE THE SHARES OF GIPL ALTH OUGH IT TOOK OVER THE ITA NO. 4720(DEL)/2009 6 BUSINESS OF GILLETTE GROUP IN THE REST OF THE W ORLD. THEREFORE A SITUATION AROSE WHERE GIPL WANTED TO EXIT LWIL AND NEW ELL WAS NOT WILLING TO STEP INTO THE SHOES OF GIPL AS AGREED EARLIER. THEREFORE UNDER THE MASTER AGREEMENT GIPL AGREED TO TRANSFER THE SHARES OF LWIL TO JAIN FAMILY THEREBY TERMINATING THE JOINT VENTURE AGREEMENT. UNDER THIS VERY AGREEMENT NEWELL AGREED TO PAY US$ 10 MIL LION TO THE JAIN FAMILY AND THE ASSESSEE COMPANY. OUT OF THESE 10 MIL LION DOLLARS THE ASSESSEE RECEIVED ONE LAKH DOLLARS FROM NEWELL. SUBSEQUE NT TO THE MASTER AGREEMENT CERTAIN AGREEMENTS WERE ENTERED INTO BETWEEN THE PARTIES GIVING EFFECT TO THE AFORESAID ARRANGEMENT. THE AO BROUGHT THE AMOUNT RECEIVED BY THE ASSESSEE FROM NEWELL TO TAX BY HO LDING THAT NO INJURY HAS BEEN CAUSED TO THE CAPITAL STRUCTURE OR THE TRADI NG STRUCTURE. HOWEVER THIS ISSUE IS NO LONGER RES-INTEGRA IN VIEW OF THE DE CISION OF HONBLE TRIBUNAL IN THE CASE OF PAYAL KAPOOR & OTHERS VS. ACIT (2 006) 98 ITD 19 DEALING WITH PAYMENT RECEIVED BY THAT ASSESSEE A ND OTHER MEMBERS OF JAIN FAMILY FROM GILLETTE COMPANY INC. USA IN 2001 AS A RESULT OF CONSENT AND WAIVER AGREEMENT DATED 17 TH JANUARY 2001. FOLLOWING THIS DECISION IT WAS HELD THAT THE RECEIPT IS CAPITAL IN NATU RE. ITA NO. 4720(DEL)/2009 7 3.1 FURTHER THE LD. COUNSEL REFERRED TO PAGE NO S. 16 TO 115 OF THE PAPER BOOK BEING THE JOINT VENTURE AGREEMENT AMONG ME MBERS OF JAIN FAMILY THE ASSESSEE AND GIPL. PAGE NO. 40 SHOWS THAT JAIN GROUP AS A WHOLE WAS TO OWN 50% SHARES AND GIPL AND ITS AFFILIAT ES THE BALANCE 50% SHARES IN LWIL. ARTICLE 2.1 OF THE AGREEMENT RE GARDING BASIC PRINCIPLES IS TO THE EFFECT THAT THE PARTIES DESIRE TO E STABLISH AND DEVELOP A LONG TERM BUSINESS ALLIANCE IN INDIA. ARTICLE 19A R EGARDING DURATION AND TERMINATION INTER-ALIA CONTAINS TWO IMPORTANT CLAU SES REGARDING TERMINATION AS UNDER:- 19A. 1.1 EITHER (I) GIPL AND/OR ITS NOMINATED AFFILIATES OR (II) JAIN GROUP SHALL CEASE TO HOLD AT LEAST 10 (TEN) PER CENT OF THE EQUITY OF THE COMPANY (WHETHER PURSUANT TO CLAUSE 20 BELOW OR OTHERWISE); 19A 1.2 THE PARTIES MUTUALLY AGREE U PON TERMINATION; 3.2 IT IS ALSO SUBMITTED THAT THE JOINT VENTURE CONTINUED UP TO THE YEAR 2000 WHEN GILLETTE WANTED TO EXIT WRITING INSTR UMENTS BUSINESS WORLD WIDE BY SELLING IT TO NEWELL. CONSEQUENTLY ASSI GNMENT AND ASSUMPTION AGREEMENT DATED 17.1.2001 WAS ENTERED INTO BETWE EN GIPL NEWELL AND THE JAIN GROUP UNDER WHICH NEWELL WAS TO STEP INT O THE SHOES OF THE GIPL IN INDIA. ITA NO. 4720(DEL)/2009 8 3.3 IT IS ALSO SUBMITTED THAT GOVERNMENT OF IND IA PERMITTED THE NEWELL TO ACQUIRE 50% SHARE CAPITAL OF LWIL BEING 12 34 375 EQUITY SHARES IN NUMBERS FROM GIPL. HOWEVER NEWELL SHOWED IN ABILITY TO ACQUIRE THE SHARE. THE GILLETTE GROUP HOWEVER WANTED TO E XIT. AFTER NEGOTIATIONS MASTER AGREEMENT WAS ENTERED INTO AMONGST MEMBE RS OF JAIN FAMILY THE ASSESSEE GILLETTE COMPANY INC. USA AND THE NEWE LL UNDER WHICH THE ASSIGNMENT AGREEMENT WAS TERMINATED. IT WAS AGREED TO TRANSFER THE SHARES TO MR. D.K. JAIN OR HIS NOMINEES FOR A CON SIDERATION OF RE. 1/-. FURTHER NEWELL AGREED TO PAY COMPENSATION OF US $ 10 MILLION TO THE MEMBERS OF JAIN FAMILY AS PER DETAILS PREVIOUSL Y NOTIFIED BY MR. D.K. JAIN. AS MENTIONED EARLIER OUT OF THIS SUM U S$ ONE LAKH AMOUNTING TO RS. 48 64 490/- WAS PAID TO THE ASSESSEE. FOR TH E SAKE OF COMPLETENESS ARTICLE 4 REGARDING FURTHER CONSIDERATION IS R EPRODUCED BELOW:- 4. FURTHER CONSIDERATION 4.1 GILLETTE AND NEWELL AGREED TO PAY THE S UMS AS SET FORTH BELOW:- (A) NEWELL SHALL PAY TO THE JAIN FAMILY (AS PER DETAILS PREVIOUSLY NOTIFIED BY MR. D.K. JAIN) AT CLOSING THE CONSIDERATION AND COMPENSATION OF USD 10 000 0 00; (B) AT THE CLOSING GILLETTE SHALL DEPOSIT I NTO AN ESCROW ACCOUNT THE SUM OF USD 25 000 000 A PORTION OF WHICH SUM SHALL BE RELEASED TO PAY INDEBTEDNESS OWED BY LWIL TO THE BANK OF AMERICA BARAKHAMBA ROAD NEW DELHI AND THEREBY SECURE ITA NO. 4720(DEL)/2009 9 THE RELEASE AND DISCHARGE OF THE CORPORATE GUAR ANTEE(S) GIVEN BY GILLETTE TO THE SAID BANK TO GUARANTEE CREDIT FACILITIES EXTENDED BY THE SAID BANK TO LWIL. THE REMAINDER OF THE ESCROWED FUNDS SHALL BE RELEAS ED TO LWIL. SATISFACTION OF THE LWIL INDEBTEDNESS TO BANK OF AMERICA SHALL BE WITHOUT RECOURSE TO LWIL O R TO THE JAIN GROUP; AND (C) GILLETTE SHALL PAY TO MS. POOJA JAIN AT CLOSING A SUM OF USD 1 000 000 BY WAY OF COMPENSATION. 4.2 GILLETTEE SHALL PAY TO MR. D.K. JAIN ( OR TO SUCH OTHER MEMBERS OF THE JAIN GROUP AS MR. D.K. JAIN MAY NOMINATE) A FURTHER SUM OF USD 1 000 000 BY 30 TH JUNE 2002. 4.3 NEWELL SHALL CREDIT LWIL IN AN AMOUNT NOT TO EXCEED USD 2 000 000 FOR OBSOLETE AND/OR UNSALEABLE STOC K OF THE PRODUCTS AND COMPONENTS AND PARTS THEREOF AND PRESENTLY HELD BY LWIL AND SUCH STOCK SHALL BE AT NEWELLS SOLE DISCRETION EXPORTED TO NEWELL OR TO ITS DESI GNEES OR DESTROYED. THE COSTS OF SHIPMENT OR DESTRUCTI ON SHALL BE BORNE INITIALLY BY NEWELL AND THEREAFTER SHALL B E DEDUCTED FROM THE CREDIT. THE REMAINDER OF THE CREDIT SHA LL BE USED BY LWIL TO OFFSET THE COST TO IT OF COMPONENTS PARTS AND PRODUCTS PURCHASED BY LWIL UNDER THE SUPPLY AG REEMENT. THE CASE OF THE LD. COUNSEL IS THAT IN VIEW OF THE DECISION IN THE CASE OF PAYAL KAPOOR (SUPRA) THE AMOUNT RECEIVED BY THE ASSESSEE IS ON CAPITAL ACCOUNT NOT LIABLE TO TAX. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THE FACTS ARE THAT THE ASSESSEE MEMBERS OF JAIN GROUP AND ITA NO. 4720(DEL)/2009 10 GIPL WERE CARRYING ON THE BUSINESS OF MANUFACTU RING WRITING INSTRUMENTS AND STATIONERY THROUGH LWIL IN WHICH THE GIPL ETC. ON ONE HAND AND MEMBERS OF JAIN FAMILY AND THE ASSESSEE ON THE OTHER HELD EQUAL SHARES. THE AGREEMENT WAS INTENDED TO LAST OVER A LONG PERIOD BUT IT CONTAINS A SPECIFIC ARTICLE REGARDING TERMINATION OF THE A GREEMENT WHICH HAS ALREADY BEEN MENTIONED BY US. THE GILLETTE GROUP WANTED TO SELL ITS WRITING INSTRUMENTS BUSINESS WORLD WIDE INCLUDING IN INDI A TO THE NEWELL. IN VIEW THEREOF AN AGREEMENT OF ASSIGNMENT WAS ENTER ED INTO ON 17.1.2001 AMONGST GIPL NEWELL AND MEMBERS OF JAIN FAMILY I NCLUDING THE ASSESSEE. UNDER THIS AGREEMENT IT WAS INTENDED THAT N EWELL WILL STEP INTO THE SHOES OF THE GIPL. CONSEQUENTLY NEWELL OBTAIN ED PERMISSION FROM THE GOVERNMENT OF INDIA FOR GETTING THE SHARES OF GILLETTE GROUP TRANSFERRED TO IT OR ITS NOMINEES ON 24.4.2001. THIS AGREEMEN T WAS SOUGHT TO BE TERMINATED ON 4.3.2002 ON CERTAIN TERMS INCLUDING TRANSFER OF SHARES OF GILLETTE GROUP TO THE JAIN GROUP AT NOMINAL VAL UE OF RE. 1/- AND PAYMENT OF COMPENSATION BY NEWELL AND GIPL TO VARIOUS PERSONS OF JAIN GROUP. SUBSEQUENTLY VARIOUS AGREEMENTS WERE ENTERED INTO TO GIVE EFFECT TO THIS AGREEMENT. THE ASSESSEE RECEIVED A SU M OF RS. 48 64 490/- UNDER THIS AGREEMENT AS PER DIRECTIONS OF MR. D.K. JA IN TO NEWELL OUT OF THE ITA NO. 4720(DEL)/2009 11 CONSIDERATION AND COMPENSATION OF US$ 10 MILLION. THE QUESTION IS- WHETHER THE RECEIPT IS ON CAPITAL ACCOUNT OR REVENUE ACCOUNT. 4.1 IN THE CASE OF GILLANDERS ARBUTHNOT & COM PANY LTD. (1964) 53 ITR 283 (SC) THE FACTS WERE THAT ONE GILLAND ERS ARBUTHNOT & COMPANY WAS THE SOLE SELLING AGENTS AND DISTRIBUTORS IN INDIA OF EXPLOSIVES MANUFACTURED BY IMPERIAL CHEMICAL INDUSTRIES (EX PORT) LTD. (THE PRINCIPAL COMPANY). THERE WAS WRITTEN CONTRACT IN THIS BEHALF. THE AGENCY AGREEMENT WAS TERMINABLE AT THE OPTION OF THE PRINCIPAL COMPANY. THE ASSESSEE COMPANY WAS INCORPORATED TO TAKE O VER THE BUSINESS OF THE AFORESAID FIRM. IN MAY 1945 THE PRINCIPAL COMPA NY WANTED TO SET UP ITS OWN ORGANIZATION FOR DISTRIBUTION OF ITS PRODUCTS AND INTIMATED THE ASSESSEE ABOUT ITS INTENTION TO CANCEL THE AGRE EMENT AFTER TWO OR THREE YEARS. THEREAFTER A DATE WAS FIXED FOR TER MINATION I.E. 1.4.1948. THE PRINCIPAL COMPANY WANTED TO COMPENSATE THE ASSE SSEE. CONSEQUENTLY THREE DIFFERENT AMOUNTS WERE PAID TO THE ASSESS EE COMPANY IN THE YEARS ENDED ON 31.3.1949 31.3.1950 AND 31.3.1951. TH ESE AMOUNTS WERE INCLUDED IN THE PROFIT AND LOSS ACCOUNT AS COM MISSION RECEIVED. BUT IN THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS CL AIMED THAT THE AMOUNTS WERE IN THE NATURE OF COMPENSATION RECEIVED ON TERMINATION OF THE AGENCY ITA NO. 4720(DEL)/2009 12 AND THEREFORE NOT INCLUDIBLE IN THE TOTAL INCOME BEING RECEIPTS OF CAPITAL NATURE. IT WAS CLAIMED THAT THE ASSESSEE HAD EMPLOYED EXPERT OFFICERS WHO WERE ACCUSTOMED TO HANDLE EXPLOSIVES AND C ANCELLATION OF THE AGENCY SERIOUSLY AFFECTED THE ORGANIZATION. THE ASSESSEE WAS UNDOUBTEDLY DEALING IN SEVERAL INFLAMMABLE SUB STANCES SUCH AS PETROLEUM KEROSENE OIL TIMBER ETC. IT WAS FOUND THAT 80% OF THE STAFF ATTACHED TO THE MAGAZINE SECTION WAS MAINTAINED AT THE EXPENSE OF THE PRINCIPAL COMPANY OUT OF WHICH SERVICES OF FIV E OFFICERS WERE TAKEN OVER BY THE PRINCIPAL COMPANY AND SIX WERE RET AINED BY THE ASSESSEE- COMPANY. THE HONBLE COURT CAME TO THE CONCLUSIO N THAT THE TERMINATION OF AGENCY DID NOT RESULT INTO IMPAIRMENT OF T RADING ORGANIZATION OF THE ASSESSEE COMPANY. NO DOUBT ONE OF THE AGENCIES WA S LOST AND THERE WAS TEMPORARY DISLOCATION IN THE ORGANIZATION OF THE BUSINESS. HOWEVER THERE WAS NOTHING ON RECORD THAT THE ASSESSEE COULD NOT REPAIR THE DISLOCATION. THEREFORE THE HONBLE COURT CONCURRED WITH THE HIGH COURT IN ITS FINDING THAT THE TERMINATION OF THE AGENCY DID NOT AFFECT PROFIT MAKING STRUCTURE OF THE ASSESSEE-COMPANY NOR IT INVOLVED LOSS OF EN DURING TRADING ASSET. ACCORDINGLY IT WAS HELD THAT THE RECEIPTS WE RE REVENUE IN NATURE. ITA NO. 4720(DEL)/2009 13 4.2 IN THE CASE OF CIT VS. BEST & COMPANY PVT . LTD. (1966) 60 ITR 11 THE AFORESAID CASE WAS FOLLOWED AND IT WAS HE LD THAT COMPENSATION RECEIVED TOWARDS LOSS OF AGENCY WAS A REVENUE R ECEIPT AS THE LOSS OF AGENCY WAS A NORMAL TRADING LOSS. 4.3 IN THE CASE OF CIT VS. J. DALMIA (1984 ) 149 ITR 215 THE FACTS ARE THAT A PROPERTY WAS UNDER CONSTRUCTION OF W HICH M/S SATISH KUMAR SOOD & SONS WERE THE OWNERS. THEY ENTERED IN TO AN AGREEMENT TO SELL THE PROPERTY TO SHRI KRISHAN PRASAD ON 29.11.19 66 AT A CONSIDERATION OF RS. 4 95 000/-. A SUM OF RS. 20 000/- WAS RECE IVED IN CASH AS EARNEST MONEY. THE CONSTRUCTION WAS COMPLETED IN ACCORD ANCE WITH CERTAIN SPECIFICATIONS WHICH WERE ANNEXED TO THE AGRE EMENT TO SELL. SHRI KRISHAN PRASAD COULD GET THE PROPERTY CONVEYED IN HIS NAME OR IN THE NAME(S) OF HIS NOMINEE(S). THE PURCHASER WAS ENTIT LED TO SPECIFIC PERFORMANCE OF THE CONTRACT THROUGH COURT OF L AW AT THE COST OF THE SELLER WHO WOULD ALSO BE LIABLE TO PAY DAMAGES IN ACCORD ANCE WITH PREVALENT MARKET PRICE. ON 26.12.1966 KRISHAN PRASAD N OMINATED J. DALMIA FOR PURCHASE OF THE PROPERTY. THE BALANCE PURCHASE C ONSIDERATION WAS NOW TO BE PAID BY J. DALMIA TO SHRI KRISHAN PRASAD. O N 18.4.1967 J. DALMIA SENT A NOTICE TO THE SELLER REGARDING OBTAINING OF COMPLETION CERTIFICATE ITA NO. 4720(DEL)/2009 14 SO THAT SALE DEED COULD BE EXECUTED IN TERMS O F THE AGREEMENT. WHEN NO REPLY WAS RECEIVED HE FILED A SUIT FOR INJUN CTION AGAINST THE SELLER TO RESTRAINT HIM FROM SELLING ALIENATING OR TRANS FERRING THE PROPERTY IN ANY OTHER MANNER. SHRI KRISHAN PRASAD WAS ALSO IMP LEADED AS A DEFENDANT. IN THE SUIT J. DALMIA AGREED TO GIVE UP HIS CLA IM OF SPECIFIC PERFORMANCE WHICH RELIEVED THE SELLER FROM THE OBLIGATION OF NOT ALIENATING THE PROPERTY. THE MATTER WAS REFERRED TO THE ARBITR ATOR WHO GAVE AWARD OF RS. 1 02 500/- AS DAMAGES OR COMPENSATION PAYABL E FOR BREACH OF CONTRACT. IN THE RETURN OF INCOME J. DALMIA CLA IMED THAT THE AMOUNT RECEIVED BY HIM WAS A WINDFALL OR A CASUAL GAIN AND THAT IT WAS NOT A CAPITAL GAIN AS THERE WAS NEITHER ANY CAPITAL A SSET OR RELINQUISHMENT OF RIGHT IN ANY ASSET. THE HONBLE COURT REFERRED TO SECTION 5 OF THE TRANSFER OF PROPERTY ACT AND MENTIONED THAT A MERE RIG HT TO SUE MAY OR MAY NOT BE PROPERTY BUT IT CANNOT BE TRANSFERRED. NO COST COULD ALSO BE ATTRIBUTED TO THE RIGHT. THEREFORE THE SUM OF R S. 1 02 500/- RECEIVED BY HIM WAS NOT ASSESSABLE AS CAPITAL GAINS. THERE FORE THE QUESTION WAS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 4.4 IN THE CASE OF SETH BANARSI DASS GUPTA (SUPRA) THE RELEVANT FACTS WERE THAT THE ASSESSEE AND FIVE BROTHERS WERE PARTNERS IN A FIRM EACH ITA NO. 4720(DEL)/2009 15 HAVING 1/6 TH SHARE. TWO BROTHERS LEASED OUT THEIR SHARE S TO THE ASSESSEE ON AN ANNUAL PAYMENT BUT THE LEASE WAS CANCEL LED. THESE TWO BROTHERS UNDERTOOK TO PAY CERTAIN AMOUNTS FOR FIVE YEARS TO THE ASSESSEE. IT WAS MENTIONED THAT THE AMOUNTS WERE RECEIVED UNDER A COMPROMISE OR BY WAY OF AMICABLE ARRANGEMENT. THEREFORE THE RECEIPTS WERE IN THE NATURE OF PROFITS RECEIVED BY THE ASSESSEE FO R THE INTEREST HELD IN THE BUSINESS. FOR THE SAKE OF READY REFERENCE THE RELEVANT PORTION OF THE JUDGMENT IS REPRODUCED BELOW:- WE HAVE HEARD LEARNED COUNSEL FOR THE ASSESSE E-APPELLANT AT LENGTH. HE HAS REFERRED TO SEVERAL AUTHORITI ES IN SUPPORT OF THE ASSESSEES STAND OF ADMISSIBILITY OF THE C LAIM ON BOTH SCORES. ACCORDING TO HIM THE PROPER TEST TO BE ADOPTED SHOULD HAVE BEEN TO FIND OUT WHETHER THE ARRANG EMENT CONSTITUTED AN APPARATUS TO EARN PROFIT WHETHE R THE ARRANGEMENT WAS ONE IN THE COURSE OF BUSINESS ACTIVITY AND WHETHER WHAT WAS RECEIVED CONSTITUTED A PART OF THE CIRCULATING CAPITAL OR WAS A PART OF THE FIXED ASSET. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED COUNSEL FO R THE APPELLANT BUT ARE NOT IN A POSITION TO ACCE PT THE SAME. THERE IS HARDLY ANY SCOPE FOR DOUBT THAT T HE BENEFIT OF SECTION 10(2)(VI) OF THE ACT WOULD BE ADMISSI BLE ONLY WHERE THE ASSESSEE IS THE OWNER OF THE PROPERTY. IT TOO IS NOT ADMISSIBLE IN RESPECT OF A FRACTIONAL CLAIM. SI MILARLY WE ARE OF THE VIEW IN AGREEMENT WITH THE HIGH COURT THAT THE AMOUNT WHICH THE ASSESSEE RECEIVED UNDER THE CO MPROMISE OR BY AN AMICABLE ARRANGEMENT WAS IN THE NATURE OF PROFITS TO BE RECEIVED BY THE ASSESSEE FOR THE INTEREST HELD IN THE BUSINESS AND THEREFORE CONSTITUTED TAXABLE INCO ME. NO OTHER POINT WAS CANVASSED BEFORE US. THIS APPEAL HA S TO FAIL AND IS HEREBY DISMISSED. PARTIES ARE DIRECTED TO BEAR THEIR OWN COSTS THROUGHOUT. ITA NO. 4720(DEL)/2009 16 4.5 THE FACTS IN THE CASE OF PAYAL KAPO OR (SUPRA) WERE THAT JAIN GROUP OF ASSESSEES HAD SHOW AN AGGREGATE RECE IPT OF RS. 69.5 CRORE AS CAPITAL RECEIPT FROM GILLETTE INC. USA. IT WAS CLAIMED THAT THE AMOUNT WAS NOT INCOME LIABLE FOR TAXATION. IT WAS SU BMITTED THAT ON 19.3.1996 THE MEMBERS OF JAIN GROUP ENTERED INTO A JOINT VENTURE AGREEMENT WITH GIPL TO JOINTLY POOL THEIR RESOURCES AND STRE NGTHENS TO CARRY ON THE BUSINESS OF MANUFACTURING AND MARKETING OF WRIT ING INSTRUMENTS AND STATIONERY PRODUCTS IN INDIA. THE MUTUAL COVEN ANTS ENTERED INTO AMONG THE PARTIES WERE CONTAINED IN THE AGREEMENT ASSURING COOPERATION AND NON-COMPETE TERMS. LWIL WAS THE EXCLUSIVE VE HICLE THROUGH WHICH THE BUSINESS WOULD BE CARRIED ON IN INDIA UNDER LUXOR AND PARKER TRADE MARKS. THE TWO PARTIES AGREED NOT TO SELL O R TRANSFER THEIR RESPECTIVE INTERESTS IN LWIL FOR FIRST SEVEN YEARS OF JOI NT VENTURE AGREEMENT. IT WAS FURTHER SUBMITTED THAT IN THE YEAR 2000 JAIN GROUP LEARNT ABOUT GILLETTE GROUPS INTENTION TO SELL THEIR WORLD WIDE BUSINESS OF WRITING INSTRUMENTS INCLUDING THEIR SHAREHOLDING IN LWI L TO NEWELL. THEREFORE THE MATTER WAS BROUGHT TO THE NOTICE OF GILLETTE GROUP AND SOUGHT TO RESOLVE THROUGH MUTUAL CONCILIATION FAILING WH ICH THE MATTER WAS SOUGHT TO BE REFERRED TO THE ARBITRATION AS PROVIDED I N THE AGREEMENT. THEREAFTER THE PARTIES NEGOTIATED THE ISSUE AND A CONSENT AND WAIVER AGREEMENT ITA NO. 4720(DEL)/2009 17 DATED 17.1.2007 WAS ARRIVED AT. UNDER THIS A GREEMENT JAIN GROUP WAS TO WITHDRAW ALL CLAIMS AND DISPUTES THEREBY ALL OWING THE GILLETTE GROUP TO SELL THEIR INTEREST TO THIRD PARTIES. IN VI EW OF THIS GILLETTE GROUP AGREED TO PAY 50 MILLION US$ TO JAIN GROUP WHIC H WERE REMITTED ON 19.1.2001. THE ASSESSEE RECEIVED RS. 2 31 67 000 /-. IT WAS ARGUED THAT THE AMOUNT RECEIVED WAS A CAPITAL RECEIPT NOT LIABLE TO TAX. REFERRING TO THE DECISION IN THE CASE OF OBEROI HOTELS PVT. LTD. THE TRIBUNAL MENTIONED ON PAGE 49 OF THE REPORT THAT THE PRIN CIPLE THAT EMERGES IS THAT THE QUESTION WHETHER A RECEIPT IS CAPITAL OR REVENUE TURNS ON THE FACTS OF THE CASE. NO INFALLIBLE CRITERIA IS AVAILABL E. THEREFORE THE FIRST QUESTION IS-WHETHER JOINT VENTURE AGREEMENT IS A CAPITAL ASSET OR A REVENUE ASSET? THE ADMITTED FACTS ARE THAT TH E AGREEMENT WAS TO ESTABLISH DEVELOP LONG-TERM BUSINESS ALLIANCE BETWEEN LUXOR GROUP AND GILLETTE GROUP. THE PRODUCTS OF GILLETTE WERE TO BE MANUFACTURED AND SOLD EXCLUSIVELY BY LWIL. THE PARTIES COULD NOT SELL OR TRANSFER THE SHARES IN THE COMPANY FOR INITIAL SEVEN YEARS. THEREFORE IT WAS HELD THAT THE AGREEMENT WAS A STRUCTURE OR FOUNDATIO N ON WHICH THE JOINT BUSINESS WAS TO BE BUILT AND CARRIED ON. THE AGREEMENT COULD NOT BE TREATED AS BUSINESS. IT WAS A CAPITAL ASSET INVESTED IN THE BUSINESS BUT NOT THE BUSINESS ITSELF. THERE IS NO MATERIAL ON THE BASIS OF WHICH IT ITA NO. 4720(DEL)/2009 18 COULD BE SAID THAT NO LOSS WAS CAUSED TO THE ASSESSEE. ACCORDING TO THE REVENUE IT DID NOT MAKE ANY DIFFERENCE WHETHER GILLETTE WAS THE PARTNER OR NEWELL WAS THE PARTNER. THIS COULD NOT BE ACCEPTED. GILLETTE WAS A WORLD KNOWN GROUP WITH RENOWNED TRADE MA RKS AND TRADE BRANDS. THEY HAD THEIR OWN MANAGEMENT AND CULTURE WH ICH WAS MADE AVAILABLE TO THE ASSESSEE. THEREFORE IT CANNOT BE SAID THAT NO LOSS OCCURRED TO THE STRUCTURE BY DINT OF DEPARTUR E OF GILLETTE GROUP. THERE IS NO INDICATION ON RECORD THAT THE PAYMENT WAS MADE FOR FUTURE LOSSES TO BE SUFFERED BY THE ASSESSEE. THE PAYMENT WAS MA DE TO THE ASSESSEE BY GILLETTE GROUP AND NOT BY NEWELL. SINCE THE COM PENSATION WAS PAID FOR MAKING CHANGES IN THE JOINT VENTURE AGREEMENT SUCH CHANGES WERE IN RESPECT OF CAPITAL ASSETS. THEREFORE IT WAS HEL D THAT THE AMOUNT RECEIVED WAS CAPITAL IN NATURE. 4.6 THE FACTS IN THE CASE OF GILLANDERS AR BUTHNOT &CO. LTD. (SUPRA) ARE DISTINGUISHABLE. IN THAT CASE THE ASSESSEE WAS DEALING WITH ITS PRINCIPAL WHO TERMINATED THE AGENCY. THE COUR T WAS OF THE VIEW THAT IT ONLY CAUSED TEMPORARY DISLOCATION. SUCH IS AL SO THE FACTS IN THE CASE OF BEST & COMPANY PVT. LTD. THE SUM AND SUBSTANCE O F THE DECISION IS THAT IF TERMINATION OF AGENCY AGREEMENT DOES NOT C AUSE IRREPARABLE LOSS AS IT ITA NO. 4720(DEL)/2009 19 MAY BE ONLY ONE OF THE BUSINESSES OR ONE OF THE AGENCIES THE RECEIPT OF COMPENSATION WILL BE IN THE REVENUE FIELD AS T HE STRUCTURE OF THE BUSINESS CAN BE REPAIRED. THE FACTS OF THE CA SE OF J. DALMIA (SUPRA) THOUGH IN A TOTALLY DIFFERENT CONTEXT CAN BE SAID TO HAVE SOME RELEVANCE TO THE FACTS OF THIS CASE. IN THAT CASE J. DA LMIA ENTERED INTO THE SHOES OF SHRI KRISHAN PRASAD WHO HAD EARLIER ENTERED INTO AN AGREEMENT FOR PURCHASE OF IMMOVABLE PROPERTY FROM THE SELLER. ON NON-PERFORMANCE OF THE AGREEMENT HE RECEIVED COMPENSATION BASED ON THE FAIR MARKET VALUE. HE HAD FOREGONE HIS RIGHT OF SPECIFIC PE RFORMANCE IN THE SUIT. THE COURT CAME TO THE CONCLUSION THAT THE COMPENSA TION AMOUNT COULD NOT BE BROUGHT TO TAX AS RIGHT TO SUE CANNOT BE TRAN SFERRED. THE RIGHT ALSO DID NOT HAVE ANY COST. THEREFORE THE AMOUNT COUL D NOT BE ASSESSED AS CAPITAL GAINS. IN THIS CASE NEWELL INTENDED TO STEP INTO THE SHOES OF THE GILLETTE AND GOVERNMENT OF INDIA ALSO ALLOWED PER MISSION TO IT TO PURCHASE THE SHARES IN LWIL BELONGING TO GILLETTE GROUP. HOWEVER IT SHOWED ITS UNWILLINGNESS TO DO SO. THEREFORE BREACH WAS BY THE INTENDING ACQUIRER AND NOT BY THE INTENDING SELLER. THE GILLETTE HA D ALREADY PAID COMPENSATION TO JAIN GROUP AS A CONSEQUENCE OF ITS INABILITY TO CONTINUE THE JOINT VENTURE AGREEMENT. THE FACTS HENCEFO RTH BECOME DISTINGUISHABLE AS THE PAYMENT HAS BEEN MADE BY A PERSON WHO ONL Y HAD SHOWN ITA NO. 4720(DEL)/2009 20 INTENTION TO COLLABORATE WITH THE ASSESSEE BY STEPPING INTO THE SHOES OF GILLETTE BUT IT NEVER REALLY ENTERED INTO THE SHOES OF THE GILLETE. THE DECISION IN THE CASE OF SETH BANARSI DAS GUPT A (SUPRA) WAS THAT THE BENEFIT U/S 10(2)(VI) OF THE 1922 ACT WOULD BE ADMISSIBLE ONLY WHERE THE ASSESSEE IS THE OWNER OF THE PROPERTY. IT TOO IS NOT ADMISSIBLE IN RESPECT OF A FRACTIONAL CLAIM. SIMILARLY THE AMOUNTS RECEIVED BY THE ASSESSEE UNDER COMPROMISE OR BY WAY OF AN AMICABLE SETTL EMENT WERE IN THE NATURE OF PROFITS TO BE RECEIVED FOR THE INTE REST HELD IN THE BUSINESS AND CONSTITUTED TAXABLE INCOME. THE DECISION WAS RE NDERED IN THE BACKGROUND OF FACTS THAT SIX BROTHERS WERE PARTNERS IN A F IRM EACH HAVING EQUAL SHARES. TWO BROTHERS LEASED OUT THEIR RESPECTI VE SHARES TO THE ASSESSEE BUT THE LEASES WERE CANCELLED. THESE BROTHERS UNDERTOOK TO PAY THE ASSESSEE CERTAIN AMOUNTS FOR FIVE YEARS. IT IS OBVIOUS THAT ON CANCELLATION OF LEASE ALL THE BROTHERS REMAINED PARTNERS W ITH EQUAL SHARES. THUS TWO PARTNERS PAID CERTAIN AMOUNTS FOR FIVE YEARS AND THE AMOUNT WAS HELD TO BE TAXABLE. IN THIS CASE THERE IS NO QUEST ION OF LEASING ANY PROPERTY. THE PAYMENT HAS BEEN RECEIVED BECAUSE AFTER IN ITIALLY AGREEING TO STEP INTO THE SHOES OF THE GILLETTE NEWELL DID NOT WANT TO FULFILL THIS OBLIGATION. ACCORDING TO US THE FACTS OF THE CASE OF PAYAL KAPOOR (SUPRA) ARE ALSO DISTINGUISHABLE. IN THAT CASE JAIN GROUP AND GILLETTE GROUP ITA NO. 4720(DEL)/2009 21 WERE ACTUALLY ACTING ON THE JOINT VENTURE AG REEMENT WHICH WAS TO SUBSIST FOR A LONG PERIOD OF SEVEN YEARS. THE EXIT OF GILLETTE GROUP CAUSED DAMAGE TO THE JOINT VENTURE AGREEMENT. THEREFORE IT WAS HELD THAT THE PAYMENT WAS TO COMPENSATE THE ASSESS EE FOR IMPAIRMENT OF CAPITAL STRUCTURE I.E. JOINT VENTURE AGREEMEN T. IN THIS CASE NEWELL WAS TO STEP INTO THE SHOES OF GILLETTE GROUP WHO HAD ALREADY CONDUCTED BUSINESS FROM THE YEAR 1996 TO 2001/2002. TH EREFORE EVEN IF NEWELL HAD JOINED THE JAIN GROUP FOR CARRYING ON T HE BUSINESS OF LWIL ONLY TWO TO THREE YEARS WERE LEFT FOR WHICH JAIN GR OUP HAD ALREADY BEEN ADEQUATELY COMPENSATED BY GILLETTE ON PAYMENT OF RS. 69.50 CRORE. THIS BROUGHT THE JOINT VENTURE AGREEMENT TO AN END . THEREFORE THE RATIO OF THIS CASE IS ALSO NOT APPLICABLE. 4.7 ACCORDINGLY THE QUESTION HAS TO BE DECI DED ON ITS OWN FACTS AS RIGHTLY OBSERVED BY THE TRIBUNAL IN THE CASE OF PAYAL KAPOOR BY REFERRING TO THE DECISION IN THE CASE OF OBERO I HOTELS PVT. LTD. FOR THIS PURPOSE THE RELEVANT FACTS BECOME STILL MORE SIMPLE WHICH ARE THAT NEWELL INTENDED TO PURCHASE THE INTEREST OF GILLE TTE GROUP IN LWIL WITH THE CONSENT OF ALL OTHERS AND PERMISSION WAS O BTAINED FROM THE GOVERNMENT OF INDIA. THEY DID NOT PURCHASE THE SHARES. AS A ITA NO. 4720(DEL)/2009 22 CONSEQUENCE THEY PAID SUBSTANTIAL AMOUNTS TO VARI OUS MEMBERS OF JAIN GROUP INCLUDING A SUM OF RS. 48 64 490/- TO THE ASSESSEE. IF NEWELL HAD NOT WITHDRAWN LWIL WOULD HAVE OBTAINED ADVAN TAGE ACCRUING AS A CONSEQUENCE OF ASSOCIATION WITH A WORLD WIDE GROUP. BUT THIS ADVANTAGE WAS NOT FOR A LONG PERIOD. THE POSSIBLE RESUL T WOULD HAVE BEEN INCREASE IN FUTURE PROFITS BY HAVING ACCESS TO NEWELL TECHNOLOGY BRAND NAME ETC. THIS ADVANTAGE WAS LOST. THE ASSIGNME NT AGREEMENT DID NOT COME INTO FORCE AS IT WOULD HAVE HAPPENED ONLY ON TRANSFER OF SHARES BY GILLETTE TO NEWELL. UPON DOING SO THE ASSIGN EE WOULD HAVE BECOME A PART OF JOINT VENTURE AGREEMENT IN PLACE OF GI LLETTE. THE ONLY DESCRIPTION MADE ABOUT THE ASSIGNEE IN THE AGRE EMENT IS THAT IT IS A COMPANY FORMED AND EXISTING UNDER THE LAWS O F DELAWARE USA HAVING ITS REGISTERED OFFICE IN ILLINOIS. THE LW IL WAS NOW TO CARRY THE BUSINESS UNDER THE TRADE MARKS (A) PARKER; (B) WATERMAN; (C) PAPER MATE AND (D) LIQUID PAPER IN PLACE OF EARLIER BRAND NAMES OF GILLETTE AND PARKER. THE AGREEMENT DOES NOT SPEAK OF ANY SPECIAL STRENGTHS OF THE NEWELL OR ITS MANAGEMENT PRACTICES. THEREFORE IT IS A CASE OF ENRICHMENT OF THE ASSESSEE WHICH HAS HAPPENED WITHOUT AFFE CTING ITS CAPITAL STRUCTURE OR THAT OF THE LWIL. IN ANY CASE NEWELL COULD WITHDRAW AFTER ITA NO. 4720(DEL)/2009 23 A SHORT PERIOD OF TWO TO THREE YEARS. IN THESE CIRCUMSTANCES IT CAN ONLY BE HELD THAT THE PAYMENT WAS MADE FOR ANY POSSIBL E LOSS OF FUTURE PROFITS. ACCORDINGLY THE RECEIPT IS IN THE REVENUE FIELD. 4.8 IT WAS ALSO THE CASE OF THE LD. COUNSEL T HAT SIMILAR RECEIPTS IN ALL OTHER CASES HAVE NOT BEEN TAXED BY THE REVENUE . IN THIS CONNECTION THE DETAILS OF ASSESSMENT WERE CALLED FOR AND FILE D BY THE ASSESSEE. WE FIND THAT THE ASSESSING OFFICERS OF D.K. JAIN POOJA JAIN PAYAL KAPOOR PRIYA JAIN PANKAJ JAIN AND USHA JAIN HAVE ONLY PROCES SED THEIR RETURNS. THEY HAVE NOT SCRUTINIZED THE RETURNS SO AS TO COME TO AN INFORMED CONCLUSION. THEREFORE IT CANNOT BE SAID THAT ANY DECISION IN THIS MATTER WAS TAKEN BY THEM AFTER SCRUTINIZING THE CASES I.E. AFTER DEBATE AND DISCUSSION IN THE MATTER. OBVIOUSLY THE CASE HAS NOT TRAVELE D TO ANY HIGHER FORUM WHOSE DECISION COULD BE SAID TO BE THE PRECED ENT IN THE MATTER. IN SUCH CIRCUMSTANCES IT CANNOT BE SAID THAT THE RULE O F CONSISTENCY BECOMES APPLICABLE IN THIS CASE WHICH IS OTHERWISE APPL ICABLE IF A PARTICULAR MATER HAS BEEN DECIDED IN A PARTICULAR MANNER I N A CASE OR WHEN A FUNDAMENTAL PRINCIPLE PERMEATING THE ASSESSMENT OF AN ASSESSEE HAS ITA NO. 4720(DEL)/2009 24 ALREADY BEEN DECIDED IN A PARTICULAR MANNER FOR A NUMBER OF YEARS IN THE PAST. 5. IN THE RESULT THE APPEAL IS ALLOWED. THE APPEAL WAS PRONOUNCED IN THE OPEN COURT ON 4 MARCH 2011. SD/- SD/- (I.P. BANSAL) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 4TH MARCH 2011. SP SATIA COPY OF THE ORDER FORWARDED TO:- M/S JHPL HOLDINGS PVT. LTD. NEW DELHI. DCIT CIRCLE 4(1) NEW DELHI. CIT(A) CIT THE DR ITAT NEW DELHI. ASSISTANT REGISTRAR.