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2017 (2) TMI 456 - HC - Income TaxAmount received under the agreement - whether held as a capital receipt not liable to tax or is it a business income? - Held that:- There cannot be a set formula or manner in which commercial entities engaged in business can be said to behave. In the present case, the assessee along with other business entities came together. The assessee used to carry on a restaurant business and was also distributing ice cream and related products. The agreement not to engage in the latter meant that it had ceased from doing so for ten years which can by no means of imagination be called temporary. In business parlance ten years can be as permanent as completely excluding oneself given the fast changing nature of the goodsindustry. It is quite likely that at the end of ten years, the assessee might itself not be interested in creating a distribution network and engaging in the same activity or conversely the agreement and compensation might be to defer competition which may deter it from entering into the same business. Whatever be the reasons, its desisting from the business on the one hand and agreeing to receive compensation on the other clearly points to the fact that the sum of ₹ 2 Crores was paid as non-compete fee. Therefore, it fell in the capital stream. - Decided in favour of the assessee
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