The Commissioner Of Income Tax-I v. M/S.bradma Of India Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYO. O. C. J. INCOME TAX APPEAL NO.2349 OF 2009 The Commissioner of Income Tax-I. ...Appellant. Vs.M/s.Bradma of India Ltd....Respondent...... Mr.Suresh Kumar for the Appellant.Mr.Prakash Shah i/b. PDS Legal for the Respondent. ......CORAM : DR. D.Y.CHANDRACHUD & J.P. DEVADHAR, JJ. 12[th] January, 2010. P.C.: The question of law, which has been formulated by the Revenue in the appeal against the judgment of the ITAT, is as follows: “Whether, on the facts and circumstances of the case, the Tribunal is right in law in holding that compensation of Rs.1,10,97,000/- received by the Respondent towards the reduction of business and a loss of sales is not chargeable to tax under the I.T. Act?” The Tribunal has noted that the assessee had a Sales and Service agreement and a Technology Collaboration Agreement with its foreign counterpart. Under the agreement, the assessee obtained technical know how for manufacturing Inkjet Printers. By a settlement dated 25[th] September 1996, both the agreements were terminated and the assessee was paid compensation of Rs.1.10 crores. The Tribunal has held that what the assessee lost was the right to manufacture Inkjet Printers consequent upon the termination of the agreements, which was the source of earning income. The Tribunal, after following the judgment of the Supreme Court in the case of Sirpur Paper Mills Ltd., 112 ITR 776 and the judgment of this Court in the case of Blue Star vs.CIT, 217 ITR 514, held that the source of income of the assessee was lost by the termination of the Sales and Service agreement and the Technology Collaboration Agreement. In these circumstances, the finding of fact which has been arrived at is to the effect that the compensation of Rs.1.10 crores received by the assessee was not for a reduction of business and loss of sales as contended by the revenue. On this finding of fact, no substantial question of law is raised in the appeal which shall accordingly stand dismissed. ( Dr.D.Y.Chandrachud, J.) ( J.P.Devadhar, J.)