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2016 (7) TMI 971 - ITAT BANGALORENon-compete fees receipt - taxability under Section 17(3)(iii) or 28(va) as salary income or business income or not - profit in lieu of salary - assessee is an individual and was Financial Director - Held that:- section 17(3)(iii)(b) of the Act pre- suppose the existence of relationship of employer and employee between the assessee and the person who makes the payment of “any amount” in terms of sectin 17(3)(iii) of the Act. The amount received by the assessee after cessation of the employment therefore was held as capital receipt and could not be taxed under the head “Profits in lieu of salary”. As it is clear from the surrounding fact as well as the terms and conditions of the agreement that the payment in question was made by DAL to the assessee for not sharing the assessee's knowledge of the business of airlines and particularly the secrets of the trade with third party in the business of airlines as well as any party who is going to set up the business of airlines. From the so called non-competent agreement dt.1.2.2007 it cannot be inferred that the said agreement in any way intended to compensate the assessee for loss of employment or in lieu of salary. Therefore in the absence of any contrary facts or material either brought on record by the Assessing Officer or by the CIT (Appeals) it cannot be held that the payment received by the assessee under the agreement dt.1.2.2007 is a profit in lieu of salary in terms of section 17(3)(iii) of the Act. Accordingly, we set aside the impugned order of the CIT (Appeals) and delete the addition on this account. - Decided in favour of assessee.
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