SANJIB BANERJEE, J. - (1.) The legal question raised by the Revenue in this appeal is as to whether the payment received by the assessee for exercising its voting rights in a company in a particular manner would be a capital receipt or a revenue receipt.
(2.) The Commissioner (Appeals) disagreed with the submissions of the assessee that the income had to be treated as a capital receipt since it was one-time in nature and not a recurring source of income. The Appellate Tribunal relied on a judgment of the Bombay High Court to hold that the Commissioner (Appeals) had erred and the income had to be treated as a capital receipt.
(3.) In the Bombay case, the matter pertained to the relinquishment by the assessee of the right to use brand 'Old Spice'. The original owner of Old Spice, Shulton, U.K. had an agreement under which the brand was promoted in India by the assessee. Shulton or the Old Spice brand worldwide was acquired by Procter and Gamble and Procter and Gamble wanted to market the Old Spice products through its Indian arm. The Indian arm of Procter and Gamble did not want to get into a protracted battle over the control of the brand with the erstwhile Indian promoter thereof and entered into an agreement with the controlling shareholders such that in lieu of a specified consideration, the controlling shareholders would relinquish their right to use the brand and vote accordingly at a general meeting of the company. The Bombay High Court reasoned that such income was not the usual income from business and was a one-off or accidental income relatable to the shareholding of the assessee in a particular company. It was held that such income had to be regarded as a capital receipt.;