CPT V24P7-Art1 (Content).pmd - Taxmann

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under an agreement and agreed not to engage
in any call centre, BPO and IT-enabled services
for a period of two years and also agreed not
to solicit business done by company ‘E’. Company
‘P’ also acquired certain shares from another
director to increase its shareholding in company
‘E’ up to 50%. The assessee showed the gain
on transaction as capital gain. During assessment
the AO taxed it as business profits on the ground
that the shares were not held as capital assets.
The Tribunal held in favour of revenue - It was
held that the gain from transactions was to be
taxed as business profits under section 28(va)
on the following grounds:
(a) The shares of company ‘E’ were not
purchased by the assessee as an investor,
as he was the original founder/promoter
of the company;
(b) Investment made by the assessee was in
the nature of business asset of the assessee;
and
(c) The company ‘P’ had purchased 50 per
cent of the entire equity shares of company
‘E’. Therefore, the transfer of shares
by the assessee to company ‘P’ was not
the transfer of a capital asset within the
meaning of section 2(14) but was, in fact,
a transfer/renunciation of control over
the company ‘E’ in favour of the purchaser
‘P’.
Therefore, the gain arising in the said transaction
could not be taxed as capital gain under section
45 or under section 50B and had to be assessed
as business income under section 28(va).
694
When matter is remanded, section 220(2)
interest is to be charged from the date
of fresh demand notice
In CIT v. Chika overseas (P) Ltd. [2012] 23
taxmann.com 315 (Bombay), demand was raised
against the assessee by an assessment order.
On appeal filed by assessee, the CIT(A) partially
allowed the claim of assessee. Subsequently,
the Tribunal set-aside the order of AO and
August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 74
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directed the AO to pass a fresh assessment
order. Fresh assessment order was passed by
AO and, consequently, fresh demand notice
was served on the assessee. Assessee paid the
demand after expiry of thirty days from the
date of service of demand notice. AO held that
assessee was liable to pay interest under section
220 from the date of original demand notice,
as demand was paid beyond 30 days from the
date of service of notice. CIT(A) held in favour
of assessee. The Tribunal also upheld the order
of CIT(A).
The High Court held in favour of assessee -
It held that since demand had finally crystallized
on fresh assessment order, assessee was not
liable to pay interest under section 220 for
period prior thereto. Therefore, assessee was
liable to pay interest for non-payment of demand
from the date of fresh assessment order.
Production of media content software
on beta-cam tape qualifies for deduction
under section 10B
In Asstt. CIT v. Sri Adhikari Brothers Television
Network Ltd. [2012] 23 taxmann.com 322/137
ITD 154 (Mum. - Trib.), assessee set-up a new
unit for production of media content software
which was exported on beta-cam tape to foreign
parties. AO denied claim of deduction under
section 10B on ground that production of a
media content programme on a beta-cam tape
could not be equated with an article or thing
and, therefore, assessee did not satisfy basic
condition of manufacture and production of
an article or a thing prescribed in section 10B.
The Tribunal held in favour of assessee - It
was held that incorporeal rights contained in
beta-cam tapes are ‘goods’ or ‘merchandise’.
As a result, production of media content software
on beta-cam tape qualifies for deduction under
section 10B, as it amounts to ‘goods’ or
‘merchandise’. Therefore, the assessee’s claim
to allowability of deduction under section 10B
was upheld.
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