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Shri Rakesh Dungarmal Tainwala 71, Kalpataru, Nutan Laxmi Society, JVPD Scheme Vile Parle (W), Mumbai 400049 Vs. DCIT, Range 8(3) Aayakar Bhavan, M.K. Road Mumbai 400020
June, 21st 2012
                           "D" Bench, Mumbai

                 Before Shri D. Manmohan, Vice President
               and Shri Rajendra Singh, Accountant Member

                           ITA No.3221/Mum/2011
                          (Assessment Year: 2007-08)

     Shri Rakesh Dungarmal Tainwala          DCIT, Range 8(3)
     71, Kalpataru, Nutan Laxmi          Vs. Aayakar Bhavan, M.K. Road
     Society, JVPD Scheme                    Mumbai 400020
     Vile Parle (W), Mumbai 400049
     PAN - AAAPT 9300 J
                  Appellant                           Respondent

                    Appellant by:     Shri J.P. Bairagra
                    Respondent by:    Shri C.G.K. Naik

                    Date of Hearing:       19.06.2012
                    Date of Pronouncement: 19.06.2012


Per D. Manmohan, V.P.

      This appeal, filed by the assessee, is directed against the order dated
24.03.2011 passed by the CIT(A) ­ 18, Mumbai and it pertains to
assessment year 2007-08.

2.     The following grounds were urged by the assessee: -

      "1. The learned Commissioner of Income Tax (Appeals) erred in
          confirming the action of the Assessing Officer in holding that
          consideration of Rs.2 Crores received as Non-Compete fees is
          revenue receipt and accordingly chargeable under section 28(va)
          of Income Tax Act, 1961 as against returned by the appellant as
          long term capital gain under Sec. 55(2) of the Income Tax Act.
      2.   The learned Commissioner of Income Tax (Appeals) further erred
           in confirming the action of the Assessing Officer in not allowing
           deduction of Rs.2 crores under section 54F of the Income Tax Act
           against the long term capital gain taxable under section 55(2) of
           the Income Tax Act."
                                       2                  ITA No.3221/Mum/2011
                                                  Shri Rakesh Dungarmal Tainwala

3.    Assessee is a promoter and shareholder of Tainwala Polycontainers
Ltd. (TPL). Assessee received a sum of `2 crores by way of non-compete fees
from M/s. Time Packaging Ltd. In the return filed for the assessment year
under consideration assessee claimed exemption under section 54F of the
Act by purchasing a residential property. It was contended that the non-
compete fees received is a capital receipt assessable to tax under the head
`Capital Gains'. The AO as well as the CIT(A) were of the opinion that
provisions of section 28(va) are applicable to the instant case and the
impugned sum is assessable to tax as revenue receipt and accordingly the
AO completed the assessment, which was affirmed by the CIT(A).

4.    At the time of hearing the learned counsel for the assessee fairly
submitted that identical issue has come up in the case of Ramesh D.
Tainwala in ITA No. 3853/Mum/2010 wherein the ITAT "D" Bench Mumbai
concluded that provisions of section 28(va)(a) would apply and consequently
the amount received by that assessee would be chargeable to tax as business
income and not under the head capital gains. The learned counsel for the
assessee admitted that despite the case of the assessee that non-compete fees
is assessable to tax under the head `Long Term Capital Gains', in the light of
the aforesaid decision the issue stands covered against the assessee.

5.    On the other hand, the learned D.R. relied upon the orders passed by
the tax authorities as well as the decision of the ITAT (supra)

6.    In the light of the order passed by the ITAT "D" Bench Mumbai in the
case Ramesh D. Tainwala (supra) we hold that the order passed by the
learned CIT(A) is in accordance with law and accordingly the appeal filed by
the assessee is dismissed.

Order pronounced in the open court on 19th June 2012.

               Sd/-                                      Sd/-
         (Rajendra Singh)                           (D. Manmohan)
        Accountant Member                           Vice President

Mumbai, Dated: 19th June 2012
                                       3                   ITA No.3221/Mum/2011
                                                   Shri Rakesh Dungarmal Tainwala

Copy to:

   1.   The   Appellant
   2.   The   Respondent
   3.   The   CIT(A) ­ 18, Mumbai
   4.   The   CIT­ 8, Mumbai City
   5.   The   DR, "D" Bench, ITAT, Mumbai

                                                      By Order

//True Copy//
                                                   Assistant Registrar
                                           ITAT, Mumbai Benches, Mumbai
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