COMMISSIONER OF INCOME TAX -XI Vs. SANGEETA WIG

JUDGEMENT

(1.) THE Revenue claims to be aggrieved by order dated 25.5.2012 of the Income Tax Appellate Tribunal (Tribunal, for short) in ITA No.4274/(Del)/2011 relatable to assessment year 2008-09. The question of law concerns the correctness of the Tribunal's opinion that the amount of Rs.1,20,00,000/- received by assessee, towards consideration pursuant to the memorandum of understanding signed by her with the newly inducted shareholder, was capital gain.

(2.) THE assessee as an individual had been the owner of the proprietary concern which used to provide civil engineering consultancy styled as SD Engineering Consultants. The concern was taken over by ICT-SD Engineering Consultants Pvt. The assessee received Rs.1,20,00,000/- in terms of the Ltd. w.e.f. 31.10.2007. memorandum of understanding dated 30.10.2007 and subsequent agreement dated 4.12.2007 as consideration. The two other individuals i.e. Mr. K K Kapila and his brother Mr. S D Kapila were entitled to shareholding aggregating to 55% shares in the said company; 45% was held by the assessee. In the return filed the assessee claimed that the amount received by her was on capital account and gave rise to capital gains. The Assessing Officer rejected the claim holding that it was not a capital receipt but business receipt and represented compensation for not carrying out any activity in relation to the business or profession, assessable under section 28(va) of the Act. The Commissioner of Income Tax (Appeals) reversed the findings of the Assessing Officer. The Revenue carried the matter in appeal to the Tribunal which by analyzing the fact of the agreements and also appreciating the judgments cited before it held as follows :

(3.) AFTER such consideration the Tribunal held as follows :