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2015 (3) TMI 408 - MADRAS HIGH COURTGoodwill v/s non compete fee - Tribunal held that no part of the consideration should be apportioned towards goodwill, and that the entire amount should be treated as non compete fee contrary to the ruling of this Court in the case of G.D.Naidu (1985 (11) TMI 5 - MADRAS High Court) - Held that:- The admitted fact in this case is the assessee company has transferred the technical know how and other advantages to the joint venture company consisting of the assessee company and MR and the assessee continued its business using its own logo, trade name, licenses, permits and approval under an agreement with another company. The Tribunal came to hold that there was no intention to acquire goodwill of the assessee and therefore, non-compete fee received by the assessee could not be treated as goodwill and it is not taxable as income.We find, on facts, that there is no reason to differ with the said finding. The reliance placed by the Assessing Officer on Section 55(2)(a) of the Income Tax Act was repelled by the Tribunal rightly on a plea that the said provision came into effect in the year 1998-99, whereas the assessment year in the present case is 1996-97. Therefore, there was no basis to fall back on the said provision. As has been recorded by the Commissioner of Income Tax (Appeals) and the Tribunal, we find, in the facts of the present case, that the non-compete fee received by the assessee is capital in nature. See Guffic Chem. P. Ltd. V. Commissioner of Income-Tax [2011 (3) TMI 6 - Supreme Court] - Decided in favour of assessee.
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