TMI Blog2018 (2) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... ector. 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 - S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t venture partner in M/s Suzuki Motorcycle India Pvt. Ltd. and stepped down as Managing Director of that company. He entered into an agreement whereby Suzuki India agreed to pay ₹ 1.32 crores to him 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 . The assessee claimed that this amount received was exempt on the basis of an opinion by a lawyer. He also placed on record the agreement between himself and Suzuki India. The recitals of that agreement read as follows: WHEREAS Suzuki Motor Corporation, Japan ( SMC ) and Mr. Sheel have been joint vent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but not a profession is also supported by the observations in paragraph 28 on page 692 of Kanga and Palkhivala s Law and Practice of Income-tax that clause (va) of section 28 of the Income-tax Act taxes a sum received for a restrictive covenant in relation to a business, but not a profession ; and, therefore, does not fall within the ambit of section 28(va). We may add that in the case of Guffic Chem. P. Ltd. vs. Commissioner of Income-tax (ibid) at page 606 the Hon ble Supreme Court of India has observed that compensation attributable to a negative/restrictive covenant is a capital receipt. Hence, as the sum received by the appellant does not fall within the ambit of section 28(va), it is not chargeable to tax as it constitutes a capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Recently, the Gujarat High Court in Commissioner of Income Tax v. Anjum G. Balakhia (2017) 393 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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