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2018 (2) TMI 114 - HC - Income TaxNon-compete fee - Amount per annum received by the assessee/respondent for two years - compensation received for not providing “the benefit of his knowledge of regulatory matters, negotiating skills and strategic planning expertise to any other person in India in the two wheeler segment for a period of two years from the date of the Agreeement” - whether was more of a revenue character and was therefore taxable by virtue of Section 17(3) or under Section 28(va) - ITAT held the amounts essentially received as non-compete fee, were capital and not income - Held that:- The assessee had a dual role – both as shareholder and as Managing Director. As Managing Director, he received only the non-compete amounts for two years. It is quite possible that he could have been given this amount as a capital receipt at one go for whatever reasons and that the amount be spread over two years. Undoubtedly, the Parliament has intervened and deemed that such amounts – so far as they relate to consideration for professionals should be treated as income by virtue of the amendment of 2017. However, with respect to the Revenue’s contention that regardless of that amendment even in the pre-existing law, this amount had to be treated as receipts and therefore taxable as income, cannot be accepted. It also noted Commissioner of Income Tax v. Sapthagiri Distilleries Ltd. (2014 (11) TMI 1078 - SUPREME COURT) where the Supreme Court had held that compensation received towards loss of source of income and noncompetition fee would be treated only as capital receipts and not liable to tax. Having regard to these decisions and the fact that the view of the ITAT is a plausible one - Decided against revenue
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