Case Law Details
Brief of the Case
In the present facts of the Case there were two vital issues contended by the Revenue which were dismissed by the Hon’ble High Court by observing that the amount received as restrictive covenant is a capital receipt and is taxable only as a revenue receipt w.e.f. 1/4/2003. Regarding second issue the Hon’ble High Court held that the book profits declared under P/L account cannot be disturbed.
Facts of the Case
There was an agreement between an assessee and a company due to which Assessee was prohibited from utilizing its business know-how for 5 years. The AO was of the view that the consideration received is taxable as capital gains u/s 55(2)(a) of the Act.
The AO for the assessment year recomputed the book profit under the MAT provision (section 115JA) by adding the amount received on account of goodwill and non-compete fees which were directly taken into Balance Sheet. The AO was of the views that the same amount should be routed through P/L account under the Companies Act.
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