1.  GUFFIC CHEM P. LTD. Vs. C.I.T. CIVIL APPEAL NO. 2522 OF 2011, DATE OF JUDGMENT : MARCH 16, 2011  SUPREME COURT OF INDIA 

Whether a payment under an agreement not to compete (negative covenant agreement) is a capital receipt or a revenue receipt.

The position in law is clear and well settled. There is a dichotomy between receipt of compensation by an assessee for the loss of agency and receipt of compensation attributable to the negative/restrictive covenant. The compensation received for the loss of agency is a revenue receipt whereas the compensation attributable to a negative/restrictive covenant is a capital receipt.  

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2.  THE COMMISSIONER OF INCOME TAX–V  Vs. PEPSICO INDIA HOLDING PVT. LTD. I.T.A. NO. 574/2007, DATE OF DECISION : 09.03.2011, HIGH COURT OF DELHI

(i) Whether the learned Tribunal erred in allowing amortization of the preliminary expenses of Rs. 8,02,000/- (representing 1/10th of total expenses) eligible for deduction under Section 35D of the Act before the commencement of business operations?  

(ii) Whether in the facts & circumstances of the case the learned ITAT erred in deleting the addition made by the AO on account of excess consumption of sugar and manufacturing of extra soft drinks sold outside the books of accounts by relying on extraneous considerations?

(iii) Whether the order of the learned ITAT is liable to be set aside on the ground that it erroneously records that the revised certificate was accepted by the AO while the Remand Report of the AO clearly mentions that even on the consideration of the revised certificate, an excess consumption of sugar by 1259 tonnes calculated on the basis of revised certificate of auditors and figures of consumption provided by the assessee?

(iv) Whether the learned ITAT erred in holding the MODVAT credit is not to be included in the valuation of closing stock?  

(v) Whether the learned ITAT erred in deleting the addition of Rs.2,22,96,100/- on account of MODVAT credit receivable on closing stock of raw material?

(vi) Whether the provisions of Explanation 5 to Section 32(i) of Income Tax Act, 1961 inserted w.e.f. 01.04.2002 requiring the AO to compulsorily compute depreciation is clarifcatory in nature.

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