CIT-III Hyderabad Vs Satiofi Healthcare India Private Limited (Telangana High Court)
Telangana High Court held that the surrender of the rights results in impairment of profit making apparatus of the company and thus amount received under agreement for surrender of rights in capital assets is capital receipt. Accordingly, the appeal by revenue dismissed.
Facts- The assessee is engaged in the business of manufacture and sale of Hepatitis-B Vaccine under the trade name “Shanvac-B”. The assessee is equipped with in-house Research and Development team and claims to be the first company in India to develop the Hepatitis-B Vaccine. The assessee on 14.02.2000 entered into a Co-marketing agreement with PFIZER Ltd. Under the said co-marketing agreement, the assessee has agreed to manufacture the Vaccine in bulk quantities for PFIZER Limited and supply the same to it. The said Vaccine was to be promoted, marketed and sold by the PFIZER Limited. The assessee under the co-marketing agreement received a sum of Rs.6 crores.
By serving notice under section 148, revenue treated the amount of Rs. 6 crores as revenue receipt. CIT(A) dismissed the appeal. ITAT held that the assessee has received the amount by way of capital receipt. Being aggrieved, revenue has preferred the present appeal.
