ITAT AHMEDABAD BENCH ‘D’
Mitsu Ltd.
versus
Assistant Commissioner of Income-tax
IT Appeal Nos. 3088 & 3119 (Ahd.) of 2003
[ASSESSMENT YEAR 2000-01]
Date of Pronouncement- 23.01.2013
ORDER
Mukul Kr. Shrawat, Judicial Member
These cross-appeals have been filed against the order of the ld. CIT(A)-I Surat, dated 23/04/2003. These appeals are consolidated and hereby decided by this common order.
[A] Assessee’s appeal, ITA No.3088/Ahd/2003 – A.Y. 2000-01
2. Ground Nos.1 to 4 read as under:-
1. The order of assessment is contrary to the facts and prejudicial to the assessee.
2. On appreciation of the facts and circumstances of the case and law, the additions made are contrary to law and based on erroneous understanding of the facts.
3. On appreciation of the facts and circumstances of the case and law, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the Learned Asst. CIT of Income tax in making addition of capital receipts received by the appellant company by way of non compete fees to the tune of Rs. 10,00,00,000/- treating the same as income from business. The action of the Learned Commissioner of Income Tax (Appeals) is contrary to the facts and law and deserves to be deleted.
4. On appreciation of the facts and circumstances of the case and law, the Learned Commissioner of Income Tax (Appeals) ought to have granted relief to the appellant company by deleting the addition made at the time of assessment pro to the tune of Rs. 10,00,00,000/-.
2.1 At the outset, ld. AR Mr. M.K. Patel has stated that Ground Nos. 1 & 2 are general in nature, hence not pressed. These two grounds are, therefore, dismissed being not pressed. Apropos to Ground No.3, facts in brief as emerged from the corresponding assessment order passed u/s.143(3) of the IT Act, 1961 dated 28.11.2002 were that the assessee- company has commenced its manufacturing operation during the year. The assessee has manufactured certain intermediates like Choral, TCSE, non-synthetic pyrethroid, insecticides, etc.
(a) The assessee- company was originally formed under the name M/s. Mitsu Pesticides Ltd.
(b) The assessee- company had purchased “NSP Division” from M/s. Mitsu Industries Ltd. as per assets purchased agreement dated 09/07/1999 (sic. – 3/07/1999). It was noted by the AO that the said purchase was a slump sale within the meaning of section 2(42C) of IT Act, for a lump-sum consideration of Rs. 35 crores. M/s. Mitsu Industries Ltd. was manufacturing synthetic pyrethroid (SP) and non-synthetic pyrethroid (NSP) under two separate divisions, known as “SP Division” and “NSP Division”. The assessee company has purchased only an NSP Division of M/s. Mitsu Industries Ltd. As per the agreement, the NSP Division of M/s. Mitsu Industries Ltd. was transferred to M/s. Mitsu Pesticides Ltd. (assessee).
(c) At the business premises of M/s. Bilag Industries Ltd. a survey u/s.133A of the IT Act dated 19/01/2000 was conducted. A statement of Shri Anjum G.Bilakhia, Director was recorded. There was an enquiry in respect of “non-compete receipts”. A survey report has also been furnished. Certain information were placed on record, briefly discussed here under:
(d) M/s. Bilag Industries was formerly known as M/s. Mitsu Industries Ltd.
(e) The Mitsu Industries Ltd. entered into a Joint Venture in foreign collaboration with AgrEvo S.A. Germany/France. Therein it was named as M/s. Bilag Industries Ltd.
(f) M/s. Mitsu Industries Ltd. had entered into a Jt. Venture with Hoechst Schering AgrEvo S.A. (AgrEvo) by transferring 51% equity shares by individual share holders namely (i) Anjum Bilakhia (ii) Yunus Bilakhia (iii) Zakar Bilakhia to the aforesaid foreign company, and about Rs. 253 crores was received by them in total.
(g) M/s. Mitsu Industries Ltd. was earlier known as M/s. Bilag Industries Ltd.
(h) Apart form the aforesaid amount the said foreign company, i.e. Hoechst Schering AgrEvo has paid a sum of Rs. 25.5 crores as non-compete fees to the following persons:-
