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Income Tax - Highlights / Catch Notes

Home Highlights July 2020 Year 2020 This

Receipt of non-competitive fee - non-compete fee payable under ...

Income Tax

July 23, 2020

Receipt of non-competitive fee - non-compete fee payable under the Deed of Covenant - capital receipt or revenue receipt - the matter was pertaining to the period which is much before 2003 - the agreement entered was led to loss of source of business - Not taxable as capital receipt - SC

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  1. Non-compete fees - payment received as non-competition fee under a negative covenant is a capital receipt and not taxable under the Act. - HC

  2. Non-compete fees paid - non-compete fee paid by the assessee did not create any capital assets, the same was revenue in nature- AT

  3. Addition u/s 37(1) - non-competition fee - revenue or capital expenditure - it does not bring in any capital asset - the payment is allowable u/s 37(1) - HC

  4. Disallowance of non-compete fees - Capital or revenue expenditure - expenditure has to be disallowed as capital expenditure - however depreciation to be allowed - AT

  5. Disallowance of Non-Compete Compensation - Amount paid as non-compete fee being capital out lay, can not be allowed as revenue expenditure - AT

  6. Non-compete fees - capital expenditure or revenue expenditure – warding off competition in business will constitute capital expenditure.... - HC

  7. Non-refundable portion of Advance Fee received for coaching - Income/ Revenue Recognition - only that part of the receipt is taxable in this year which accrued to the...

  8. Capital receipt or revenue receipt – financial schemes in which deposits were collected from the Public - The assessee is merely a custodian of the deposit - not taxable...

  9. Excise Duty Refund - Revenue receipt or capital receipt - the excise duty refund received is in the nature of capital receipt and is not exigible to the tax - HC

  10. Nature of subsidy received - Capital or revenue receipt - amount given as subsidy to meet any revenue expenditure can safely be termed as revenue receipt - HC

 

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