COMMISSIONER OF INCOME TAX Vs. MEDIWORLD PUBLICATIONS

JUDGEMENT

(1.) Present appeal is filed under Section 260 (A) (1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), against the impugned order dated 2nd July, 2010 passed by the ITAT. The following substantial questions of law are being raised for our consideration :-

(2.) To recite the genesis of the instant appeal, following facts are concisely recapitulated herein under :-

(3.) We may record that before taking the aforesaid view the AO asked the assessee company as to why sale shown as long term capital gain be not treated as business income for the year in question In the reply submitted by it, the assessee explained that it was publishing the journals since 1995 onwards, but in all the journals published, the period of starting the journals was more than three years from the date of transfer of these assets. Further, all the journals were initiated by the company itself and were not in existence earlier. These journals are registered with the Registrar of Newspapers of India (RNI), before registration, the brand name/titles of journals are approved by the RNI. Thus, the assessee was the owner of brand name of these journals which were also registered/indexed with Indian National Scientific Documentation Centre, Govt. of India (hereinafter referred to as the INSDOC). Thus, the assessee was exclusively holder of the ITA copyrights in all the journals and was also the exclusive holder of Trade Marks of all the journals. These were, therefore, intangible assets within the meaning of Section 55 (2) (a) of the Act. The cost of acquisition of these assets was 'Nil' and the consideration received on the sale of these intangible assets therefore, should be treated as long term capital gain. The AO, however, did not accept the aforesaid contention of the assessee. He examined the features of the agreement entered into between the assessee and the transferee of the aforesaid assets on the basis of which he noticed as under :-