Income Tax Appellate Tribunal - Delhi
Jhpl Holdings Pvt. Ltd, New Delhi vs Department Of Income Tax
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 JHPL 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 the effect that the ld. CIT(Appeals) erred in deleting the addition of Rs. 48,64,490/- made by the AO by treating trading settlement amount received as revenue receipt as against the capital receipt claimed by the assessee.
2. The facts as mentioned in the assessment order 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 assessee-company created capital reserve of Rs. 48,64,490/-. In this connection, it has been mentioned that on 19.03.1996, the assessee and other members of Jain 2 ITA No. 4720(Del)/2009 group entered into a joint venture agreement with Gillette India Pvt. Ltd. (GIPL) to jointly pool their resources and strengthens to carry on the business of manufacturing and marketing the writing instruments and stationery products in India. It was understood 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 agreed amongst the parties that they will not sell, transfer etc. their interests in LWIL. However, in the year 2000, Gillette group decided to sell its world wide business of writing instruments including its shareholding in LWIL to Newell Rubbermaid Inc., USA (Newell). In pursuance of this decision, Gillette group, Newell and Jain group entered into a addenda to joint venture agreement whereby Newell agreed to acquire the shareholding of Gillette in LWIL i.e., it decided to step into the shoes of Gillette and honour all rights and obligations of Gillette arising on account of agreement dated 19.3.1996. In April, 2001, Newell 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 ahead with the acquisition 3 ITA No. 4720(Del)/2009 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 agreement and all obligations arising thereunder, including acquisition of shares of Gillette group. The Gillette also wanted to exit from the joint venture. As a consequence of this re-arrangement, the Newell paid the aforesaid amount to the assessee. The case of the assessee before the AO was that the receipt was capital in nature, not liable to tax in view of the decision of Hon'ble Delhi High Court in the case of CIT Vs. J. Dalmia, (1984) 149 ITR 215. 2.1 The AO considered the facts of the case and submissions made before him. He referred to the condition precedent, 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 narration, 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 group raised several 4 ITA No. 4720(Del)/2009 objections, and that Gillette and Newell threatened with legal action sought settlement of disputes such as suitable relief including specific performance of rights and obligations under agreement dated 19.3.1996. Thereafter, an out of court settlement was arrived at under which Newell inter-alia agreed to pay the aforesaid sum to the assessee for agreeing to release and withdrawal of all claims by the assessee. Similarly, payments of different amounts were made to members of Jain group. This argument was not accepted as in the 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 transferable right. Thus, the amount received is under a compromise or amicable 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 that 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 business 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 receipt is revenue in nature. 5 ITA No. 4720(Del)/2009 Accordingly, the amount was added to the total income, 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 that the members of Jain family, the assessee and the GIPL were carrying 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, according to which an assignment agreement was entered into between GIPL, Newell, Jain family and JHPL. The share holding of GIPL was sought to be transferred to Newell with the concurrence of members of Jain family and JHPL. Newell was granted approval by the Ministry of Commerce and Industries for acquiring these shares. However, Newell expressed its unwillingness to acquire the shares of GIPL although it took over the 6 ITA No. 4720(Del)/2009 business of Gillette Group in the rest of the world. Therefore, a situation arose where GIPL wanted to exit LWIL and Newell 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 million to the Jain family and the assessee company. Out of these 10 million dollars, the assessee received one lakh dollars from Newell. Subsequent 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 holding that no injury has been caused to the capital structure or the trading structure. However, this issue is no longer res-integra in view of the decision of Hon'ble Tribunal in the case of Payal Kapoor & Others Vs. ACIT, (2006) 98 ITD 19, dealing with payment received by that assessee and other members of Jain family from Gillette Company Inc., USA, in 2001 as a result of Consent and Waiver Agreement dated 17th January, 2001. Following this decision, it was held that the receipt is capital in nature.
7 ITA No. 4720(Del)/20093.1 Further, the ld. counsel referred to page nos. 16 to 115 of the paper book, being the joint venture agreement among members 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 affiliates the balance 50% shares in LWIL. Article 2.1 of the agreement regarding "basic principles"
is to the effect that the parties desire to establish and develop a long term business alliance in India. Article 19A regarding "duration and termination" inter-alia contains two important clauses 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 upon termination;"
3.2 It is also submitted that the joint venture continued up to the year 2000 when Gillette wanted to exit writing instruments business world wide by selling it to Newell. Consequently, assignment and assumption agreement dated 17.1.2001 was entered into between GIPL, Newell and the Jain group, under which Newell was to step into the shoes of the GIPL in India.8 ITA No. 4720(Del)/2009
3.3 It is also submitted that Government of India permitted the Newell to acquire 50% share capital of LWIL, being 12,34,375 equity shares in numbers from GIPL. However, Newell showed inability to acquire the share. The Gillette Group however wanted to exit. After negotiations, master agreement was entered into amongst members of Jain family, the assessee, Gillette Company Inc., USA and the Newell, under which the assignment agreement was terminated. It was agreed to transfer the shares to Mr. D.K. Jain or his nominees for a consideration of Re. 1/-.
Further, Newell agreed to pay compensation of US$ 10 million to the members of Jain family as per details previously notified by Mr. D.K. Jain. As mentioned earlier, out of this sum, US$ one lakh, amounting to Rs. 48,64,490/- was paid to the assessee. For the sake of completeness, Article 4 regarding further consideration is reproduced below:-
"4. FURTHER CONSIDERATION
4.1 Gillette and Newell agreed to pay the sums 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 10,000,000;
(b) At the Closing Gillette shall deposit into 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 9 ITA No. 4720(Del)/2009 the release and discharge of the corporate guarantee(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 released to LWIL. Satisfaction of the LWIL indebtedness to Bank of America shall be without recourse to LWIL or 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 30th June, 2002.
4.3 Newell shall credit LWIL in an amount not to exceed USD 2,000,000 for obsolete and/or unsaleable stock of the products and components and parts thereof and presently held by LWIL and such stock shall be, at Newell's sole discretion, exported to Newell or to its designees or destroyed. The costs of shipment or destruction shall be borne initially by Newell and thereafter shall be deducted from the credit. The remainder of the credit shall be used by LWIL to offset the cost to it of components, parts and products purchased by LWIL under the supply agreement." 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 10 ITA No. 4720(Del)/2009 GIPL were carrying on the business of manufacturing 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 agreement, which has already been mentioned by us. The Gillette group wanted to sell its writing instruments business world wide including in India to the Newell. In view thereof, an agreement of assignment was entered into on 17.1.2001 amongst GIPL, Newell and members of Jain family including the assessee. Under this agreement, it was intended that Newell will step into the shoes of the GIPL. Consequently, Newell obtained permission from the Government of India for getting the shares of Gillette group transferred to it or its nominees on 24.4.2001. This agreement 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 value 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 sum of Rs. 48,64,490/- under this agreement as per directions of Mr. D.K. Jain to Newell out of the 11 ITA No. 4720(Del)/2009 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 & Company Ltd., (1964) 53 ITR 283 (SC), the facts were that one Gillanders Arbuthnot & Company was the sole selling agents and distributors in India of explosives manufactured by Imperial Chemical Industries (Export) 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 over the business of the aforesaid firm. In May, 1945, the principal company wanted to set up its own organization for distribution of its products and intimated the assessee about its intention to cancel the agreement after two or three years. Thereafter, a date was fixed for termination i.e., 1.4.1948. The principal company wanted to compensate the assessee. Consequently, three different amounts were paid to the assessee company in the years ended on 31.3.1949, 31.3.1950 and 31.3.1951. These amounts were included in the profit and loss account as commission received. But in the course of assessment proceedings, it was claimed that the amounts were in the nature of compensation received on termination of the agency 12 ITA No. 4720(Del)/2009 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 cancellation of the agency seriously affected the organization. The assessee was undoubtedly dealing in several inflammable substances, 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 five officers were taken over by the principal company and six were retained by the assessee- company. The Hon'ble Court came to the conclusion that the termination of agency did not result into impairment of trading organization of the assessee company. No doubt one of the agencies was 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 Hon'ble 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 enduring trading asset. Accordingly, it was held that the receipts were revenue in nature. 13 ITA No. 4720(Del)/2009 4.2 In the case of CIT Vs. Best & Company Pvt. Ltd., (1966) 60 ITR 11, the aforesaid case was followed and it was held that compensation received towards loss of agency was a revenue receipt 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 which M/s Satish Kumar Sood & Sons were the owners. They entered into an agreement to sell the property to Shri Krishan Prasad on 29.11.1966 at a consideration of Rs. 4,95,000/-. A sum of Rs. 20,000/- was received in cash as earnest money. The construction was completed in accordance with certain specifications, which were annexed to the agreement 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 entitled to specific performance of the contract through court of law at the cost of the seller who would also be liable to pay damages in accordance with prevalent market price. On 26.12.1966, Krishan Prasad nominated J. Dalmia for purchase of the property. The balance purchase consideration was now to be paid by J. Dalmia to Shri Krishan Prasad. On 18.4.1967, J. Dalmia sent a notice to the seller regarding obtaining of completion certificate 14 ITA No. 4720(Del)/2009 so that sale deed could be executed in terms of the agreement. When no reply was received, he filed a suit for injunction against the seller to restraint him from selling, alienating or transferring the property in any other manner. Shri Krishan Prasad was also impleaded as a defendant. In the suit, J. Dalmia agreed to give up his claim of specific performance which relieved the seller from the obligation of not alienating the property. The matter was referred to the arbitrator, who gave award of Rs. 1,02,500/- as damages or compensation payable for breach of contract. In the return of income, J. Dalmia claimed 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 asset or relinquishment of right in any asset. The Hon'ble Court referred to section 5 of the Transfer of Property Act and mentioned that a mere right 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 Rs. 1,02,500/- received by him was not assessable as capital gains. Therefore, 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 15 ITA No. 4720(Del)/2009 having 1/6th share. Two brothers leased out their shares to the assessee on an annual payment but the lease was cancelled. 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 for 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 assessee-appellant at length. He has referred to several authorities in support of the assessee's stand of admissibility of the claim on both scores. According to him, the proper test to be adopted should have been to find out whether the arrangement constituted an apparatus to earn profit, whether 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 for the appellant but are not in a position to accept the same. There is hardly any scope for doubt that the benefit of section 10(2)(vi) of the 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, we are of the view, in agreement with the High Court, that the amount which the assessee received under the compromise 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 income. No other point was canvassed before us. This appeal has to fail and is hereby dismissed. Parties are directed to bear their own costs throughout."16 ITA No. 4720(Del)/2009
4.5 The facts in the case of Payal Kapoor (supra) were that Jain group of assessees had show an aggregate receipt 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 submitted that on 19.3.1996, the members of Jain group entered into a joint venture agreement with GIPL to jointly pool their resources and strengthens to carry on the business of manufacturing and marketing of writing instruments and stationery products in India. The mutual covenants entered into among the parties were contained in the agreement assuring cooperation and non-compete terms. LWIL was the exclusive vehicle through which the business would be carried on in India under Luxor and Parker trade marks. The two parties agreed not to sell or transfer their respective interests in LWIL for first seven years of joint venture agreement. It was further submitted that in the year 2000, Jain group learnt about Gillette group's intention to sell their world wide business of writing instruments including their shareholding in LWIL to Newell. Therefore, the matter was brought to the notice of Gillette group and sought to resolve through mutual conciliation, failing which the matter was sought to be referred to the arbitration as provided in the agreement. Thereafter, the parties negotiated the issue and a consent and waiver agreement 17 ITA No. 4720(Del)/2009 dated 17.1.2007 was arrived at. Under this agreement, Jain group was to withdraw all claims and disputes thereby allowing the Gillette group to sell their interest to third parties. In view of this, Gillette group agreed to pay 50 million US$ to Jain group which 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 principle that emerges is that the question whether a receipt is capital or revenue turns on the facts of the case. No infallible criteria is available. Therefore, the first question is-whether, joint venture agreement is a capital asset or a revenue asset? The admitted facts are that the 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 foundation 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 18 ITA No. 4720(Del)/2009 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 marks and trade brands. They had their own management and culture which was made available to the assessee. Therefore, it cannot be said that no loss occurred to the structure by dint of departure 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 made to the assessee by Gillette group and not by Newell. Since the compensation was paid for making changes in the joint venture agreement, such changes were in respect of capital assets. Therefore, it was held that the amount received was capital in nature.
4.6 The facts in the case of Gillanders Arbuthnot &Co. Ltd. (supra) are distinguishable. In that case, the assessee was dealing with its principal, who terminated the agency. The Court was of the view that it only caused temporary dislocation. Such is also the facts in the case of Best & Company Pvt. Ltd. The sum and substance of the decision is that if termination of agency agreement does not cause irreparable loss, as it 19 ITA No. 4720(Del)/2009 may be only one of the businesses or one of the agencies, the receipt of compensation will be in the revenue field, as the structure of the business can be repaired. The facts of the case 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. Dalmia 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 performance in the suit. The Court came to the conclusion that the compensation amount could not be brought to tax as right to sue cannot be transferred. The right also did not have any cost. Therefore, the amount could 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 permission 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 had already paid compensation to Jain group as a consequence of its inability to continue the joint venture agreement. The facts henceforth become distinguishable as the payment has been made by a person who only had shown 20 ITA No. 4720(Del)/2009 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 Gupta (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 settlement were in the nature of profits to be received for the interest held in the business and constituted taxable income. The decision was rendered in the background of facts that six brothers were partners in a firm, each having equal shares. Two brothers leased out their respective 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 with 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 question of leasing any property. The payment has been received because after initially 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 21 ITA No. 4720(Del)/2009 were actually acting on the joint venture agreement, 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 assessee for impairment of capital structure i.e., joint venture agreement. 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. Therefore, even if Newell had joined the Jain group for carrying on the business of LWIL, only two to three years were left, for which Jain group 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 decided 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 Oberoi Hotels Pvt. Ltd. For this purpose, the relevant facts become still more simple, which are that Newell intended to purchase the interest of Gillette group in LWIL with the consent of all others and permission was obtained from the government of India. They did not purchase the shares. As a 22 ITA No. 4720(Del)/2009 consequence they paid substantial amounts to various members of Jain group including a sum of Rs. 48,64,490/- to the assessee. If Newell had not withdrawn, LWIL would have obtained advantage accruing as a consequence of association with a world wide group. But this advantage was not for a long period. The possible result would have been increase in future profits by having access to Newell technology, brand name etc. This advantage was lost. The assignment agreement did not come into force as it would have happened only on transfer of shares by Gillette to Newell. Upon doing so, the assignee would have become a part of joint venture agreement in place of Gillette. The only description made about the assignee in the agreement is that it is a company formed and existing under the laws of Delaware, USA, having its registered office in Illinois. The LWIL 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 affecting its capital structure or that of the LWIL. In any case, Newell could withdraw after 23 ITA No. 4720(Del)/2009 a short period of two to three years. In these circumstances, it can only be held that the payment was made for any possible loss of future profits. Accordingly, the receipt is in the revenue field.
4.8 It was also the case of the ld. counsel that similar receipts in all other cases have not been taxed by the revenue. In this connection, the details of assessment were called for and filed 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 processed 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 traveled to any higher forum whose decision could be said to be the precedent in the matter. In such circumstances, it cannot be said that the rule of consistency becomes applicable in this case, which is otherwise applicable if a particular mater has been decided in a particular manner in a case or when a fundamental principle permeating the assessment of an assessee has 24 ITA No. 4720(Del)/2009 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.