CIT Vs. WINTAC LTD.

JUDGEMENT

(1.) THE Revenue has preferred this appeal under section 260A of the Income Tax Act, challenging the order dt. 2 -1 -2006 made in ITA No. 81/Bang/2005 passed by the Tribunal, Bangalore setting aside the assessment order passed by the assessing authority as well as the first appellate authority for the assessment year 2001 -02.

(2.) THE respondent/assessee M/s. Wintac Ltd., earlier known as M/s. Recon Ltd., is a company incorporated under the provisions of Companies Act, 1956, carrying on the business of formulations and manufacture of bulk drug, having its three units at No. 82/A, Jigani Unit - -Manufacturing bulk drugs, Bannerghatta Road Unit - -R & D Unit, Nelamangala Unit - -Formulation.

(3.) THE case was selected for scrutiny and notice under section 143(2) was issued on 25 -10 -2002. The Authorized Representative of the assessee appeared on behalf of the assessee. On examination of IT returns and other details furnished by the assessee -company, it was noticed that the assessee -company entered into an agreement of sale of two Units i.e. Unit at Jigani and Bannerghatta Unit to M/s. Tumkur Chemicals Ltd., (hereinafter referred to as TCL) for a consideration of Rs. 5.75 crores. Subsequently that agreement was cancelled. In view of that, the assessee/company forfeited a sum of Rs. 1.10 crores from the amount paid by the TCL. The said amount was treated as capital receipt and the same is not liable to be taxed. However, the assessing authority treated the said amount as revenue receipt and assessed for tax.