Case Law Details
Brief of the Case
Bombay High Court held In the case of CIT vs. Mrs. Hemal Raju Shete that as per agreement, the deferred consideration is payable over a period of four years and the formula prescribed in the agreement itself makes it clear that the deferred consideration to be received by the assessee in the four years would be dependent upon the profits made by M/s. Unisol in each of the years. Thus in case M/s. Unisol does not make net profit in terms of the formula for the year under consideration then no amount would be payable to the assessee as deferred consideration. The consideration of Rs.20 crores is not an assured consideration to be received. It is only the maximum that could be received. Therefore it is not a case where any consideration out of Rs.20 crores or part thereof has been received or has accrued to the assessee. Also the assessee has offered, amount received in subsequent years as taxable income of those years. Hence contingent deferred consideration cannot be tax in the assessment year 2006-07 itself.
Facts of the Case
The assessee filed her return of income for the assessment year 2006-07 declaring total income of Rs.11,68,470/-. The respondent-assessee had also shown the long term capital gain of Rs.42,38,674/- arising out of the sale of 75,000 shares of M/s. Unisol Infraservices Ltd. (M/s. Unisol) to one M/s.Radha Krishna Hospitality Services (P) Ltd. (RKHS) in terms of agreement dated 25th January, 2006. The Assessing Officer on perusal of the agreement dated 25th January, 2006 was of the view that under the agreement, the assessee as well as other co-owners (Shete family) of M/s. Unisol were to receive in aggregate a sum of Rs.20 crores and proceeded to tax entire amount of Rs.20 crores in the subject assessment year in the hands of all co-owners of shares. This resulted in the respondent-assessee being taxed on her share of capital gains at Rs.4.48 crores after availing exemption under Section 54EC.
Contention of the Revenue
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