TMI Blog2005 (5) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... rofession, was a capital receipt and not chargeable to tax. The short issue that we are really required to decide, therefore, is whether the compensation received by the assessee is capital in nature or is of revenue in nature. 3. The factual matrix of the case is like this. The assessee was managing director of a company by the name of M.C. Davar Aromatics Ltd. (MCDAL, in short), since inception but his association with the MCDAL ceased w.e.f. 2nd Sept., 1996. MCDAL had a collaboration agreement with a Swiss company by the name of Firemenich SA. As managing director of MCDAL, the assessee obviously had access to some sensitive information in the nature of trade secrets, company knowledge and other information relating to MCDAL as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered factual matrix of the case as also the applicable legal position. 5. As rightly concluded by the CIT(A), there appears to be no basis, save and except for the suspicion of the AO for AO's coming to the conclusion that this non-compete agreement between Firemenich and the assessee is only to avoid taxes and is, therefore, a sham agreement. On the other hand, there is overwhelming material on record to establish the factual background in which the said agreement was entered into. The assessee's close association with MCDAL and MCDAL being '"engaged in the manufacture, compounding, diluting, marketing and sale of fragrances, flavours and related systems pursuant to the agency agreement in force between MCDAL and Firemenich" is fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved by the Revenue. That has not been done. Everything proceeds on assumptions. In the light of these discussions, we are of the considered view that the CIT(A) rightly deleted the impugned disallowance by holding the same to be a capital receipt. In any event, we also find that a co-ordinate Bench of this Tribunal, in the case of Kushal N. Desai vs. Jt. CIT (ITA No. 5025/Mum/2000, order dt. 28th May, 2002) has held that s. 28(va), whereby all sums received or receivable in cash or kind under an agreement for not carrying out any activity in relation to any business have been brought to tax, is only retrospective in nature w.e.f. asst. yr. 2003-04. Therefore, for this reason also, the CIT(A)'s conclusions meet our approval. 6. For the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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