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2024 (5) TMI 389 - ITAT DELHINature of receipt - Taxability u/s 17(3)(iii) - compensation received under Non-Competition Agreement on termination of job (employment) - payment under the profits in lieu of salary or capital receipt - Payment by erstwhile employer of the assessee on termination of service - DR submitted that after cessation of employment, assessee entered into an agreement “Deed full and complete release and agreement of trade secrets and confidentiality” and received the sum - Assessee claimed that amount as not taxable as it was a capital receipt given to him as ex-gratia by Coca Cola India Inc. on executing a non-disclosure and release agreement ‘after’ cessation of his services. HELD THAT:- As per ratio of judgment in Guffic Chem Private Limited [2011 (3) TMI 6 - SUPREME COURT] it is well settled that compensation attributable to a negative/restrictive covenant is capital receipt. According to judgment of Mrs. Tara Sinha [2017 (8) TMI 731 - DELHI HIGH COURT] a non compete fee under Non-Competition Agreement is not chargeable to income tax. In view of above said material fact especially assessee employee having received sum as per “Deed of full and complete release and agreement on trade secrets and confidentiality” containing non compete clause as per above said well settled principles of law being capital receipt is not taxable - Assesse appeal allowed.
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