Case Law Details
Case Name : Guffic Chem P. Ltd. Vs C.I.T. (Supreme Court of India)
Related Assessment Year :
Courts :
Supreme Court of India
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Summary of the case:- Compensation received under Non-Competition Agreement became taxable as a capital receipt and not as a revenue receipt by specific legislative mandate vide Section 28(va) and that too with effect from 1.4.2003. Hence, the said Section 28(va) is amendatory and not clarificatory. Lastly, in Commissioner of Income-Tax, Nagpur v. Rai Bahadur Jairam Valji reported in 35 ITR 148 it was held by this Court that if a contract is entered into in the ordinary course of business, any compensation received for its termination (loss of agency) would be a revenue receipt. In the present...
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Should Payment received as part of Non compete clause ( for 5 years ) by an employee (who continues in the employment with the same organisation),be treated as revenue or capital ? If revenue should the income be recognised over the period of the agreement (5 years in this case) or taxed fully on the year the payment was received ?