Compensation attributable to a negative/restrictive covenant is a capital receipt & Taxable u/s 28(va)

Shiv Raj Gupta Vs CIT (Supreme Court)

The issue under consideration is whether the non-compete fee could be taxed under any provision other than Section 28(ii)(a) of the Income Tax Act, 1961?

In the present case, a share of the face value of INR 10 and market value of INR 3 was sold for INR 30 as a result of control premium having to be paid. It is important to note that each member of the family was paid for his/her shares in the company, the lion’s share being paid to the assessee’s son and wife

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