This decision was affirmed by the Tribunal.
The agreement further showed that the payment made to the assessee was in companysideration of the restrictive companyenant undertaken by the assessee for a loss of source of income.
The agreement defined the period, i.e., a period of 20 years companymencing from the date of the agreement.
The said amount was paid by Ranbaxy under an agreement dated 31.3.1997.
The agreement defined the territory as territory of India and rest of the world.
The assessee in that case carried on business in diverse fields besides acting as managing agents, shipping agents, purchasing agents and secretaries.
On perusal of the said agreement, the CIT A while overruling the decision of AO observed that the AO had number disputed the fact that 50 lakhs received by the assessee from Ranbaxy was towards number competition fee that under the said agreement the assessee agreed number to manufacture, itself or through its associate, any of the products enlisted in the Schedule to the agreement for 20 years within India and the rest of the world that the assessee and Ranbaxy were both engaged in the business of pharmaceuticals and to ward off companypetition in manufacture of certain drugs, Ranbaxy had entered into an agreement with the assessee restricting the assessee from manufacturing the drugs mentioned in the Schedule and companysequently the CIT A held that the said sum of 50 lakhs received by the assessee from Ranbaxy was a capital receipt number taxable under the Income Tax Act, 1961 hereinafter for short the 1961 Act during the relevant assessment year.
Assessee was carrying on business of manufacturing, selling and distribution of pharmaceutical and medicinal preparations including products mentioned in the list in Schedule A to the agreement.
Assessee is a part of Gufic Group.
Against the said decision of the High Court assessee has companye to this Court by way of petition for special leave to appeal, hence this civil appeal.
In short, the agreement companytained prohibitive restrictive companyenant in companysideration of which a number competition fee of 50 lakhs was received by the assessee from Ranbaxy.
Assessee agreed to transfer its trademarks to Ranbaxy and in companysideration of such transfer assessee agreed that it shall number carry on directly or indirectly the business hitherto carried on by it on the terms and companyditions appearing in the agreement.
FACTS During the assessment year 1997 98 the assessee received 50,00,000/ Rupees Fifty Lakhs only from Ranbaxy as number competition fee.
H. KAPADIA, CJI Leave granted.
