“The Assessee is taking the shelter of the specific clause in the Letter of Intent for claiming that the said receipt is a capital receipt/capital subsidy which is not taxable. However, how is it true? Is the payment really in pursuance of the said clause? Any prudent business house would not return back a part of the capital subscribed by the share holders. So far, this practice is unheard of. It is a very unusual payment. Therefore, the totality of the events need to be considered before deciding whether the said receipt is really in pursuance of the said clause. While considering so, from the above background discussed, it can be easily inferred that the over-riding effect for making the payment is the business relationship which is mutually beneficial to both the parties and not only the specific clause pin-pointed by the assessee. What is needed to be considered here is that if the RSA of UK had made a alliance with any other Tom, Dick & Harry (from India, of course) would they have made a similar payment to them. If one would search for the answer of this question, one would realise that it would not had been so in that case.”
