Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: articles on VAT and GST in India :: form 3cd :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: Central Excise rule to resale the machines to a new company :: cpt :: list of goods taxed at 4% :: due date for vat payment :: ACCOUNTING STANDARDS :: TAX RATES - GOODS TAXABLE @ 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: empanelment :: VAT Audit :: TDS :: ACCOUNTING STANDARD :: VAT RATES
 
 
« ITAT-Constitution of Benches »
 Income Tax Appellate Tribunal Kolkata Benches Kolkata Consolidated list of Orders read for Pronouncement on 02/12/2016
 Income TAx Appellate Tibunal Pune Benches Pune Causelist for Bench "A" For The Week Ending 09/12/2016
 Income Tax Appellate Tribunal Kolkata Benches Kolkata Constitution of Kolkata Benches for 05/12/2016
 Income Tax Appellate Tribunal Ahmedabad Benches ahmedabad S/shri R. P. Tolani, Jm & Manish Borad, Am Causelist For Bench 'A' Date : 05/12/2016
 Income Tax Appellate Tribunal New Delhi Benches New Delhi The Revised Constitution of Delhi Benches from 28/11/2016 To 01/12/2016
 Income Tax Appellate Tribunal Mumbai Benches Mumbai Statement showing The List of Special Bench Cases Pending for 2016 as on 16/11/2016
 Income Tax Appellate Tribunal Mumbai Benches Mumbai list of order ready for pronouncement on 30/11/2016
 Income Tax Appellate Tribunal Chennai Benches Chennaj Revised Constitution For The Week From O5/1212016 To O8/12120-16
 Income Tax Appellate Tribunal: Vice President’s Secretariat: Hyderabad Constitution Of Hyderabad Benches
 Income Tax Appellate Tribunal, Visakhapatnam Bench List Of Division Bench Cases Posted Before Shri V.Durga Rao, Hon'ble Judicial Member & Shri G.Manjunatha, Hon'ble Accountant Member During The Period From 21.11.2016 To 09.12.2016
 Income Tax Appellate Tribunal, Mumbai Benches, Mumbai. List Of Division Bench Cases Posted For Hearing From 25.11.2016

ACIT vs. Dr. B.V. Raju (ITAT Hyderabad Special Bench)
February, 16th 2012
Law on taxing non-compete fee u/s 28(va) & 55(2)(a) explained
 
In AY 2000-01, the assessee received Rs. 11 crores pursuant to a non-compete agreement which was for 5 years. The AO held that there was a transfer by way of relinquishment of the assessees right to manufacture and that the same was chargeable to capital gains by taking Nil cost u/s 55(2)(a). This was reversed by the CIT (A) on the ground that the personal skills of the assessee were placed under restraint and as the said personal skills were not a capital asset, capital gains was not chargeable. On appeal to the Tribunal, the matter was referred to the Special bench. HELD by the Special Bench:

(i) The taxability of a non-compete fee depends on the purpose for which it is paid. A non-compete fee can be divided into two categories: (a) consideration received by the transferor of a business for agreeing not to carry on the same business; (b) consideration received by other persons associated with the transferor to ensure that they do not indulge in competing business. For AY 2003-04 & onwards, non-compete fee received by the transferor of a business is taxable as a capital gains in view of s. 55(2)(a) which provides that the cost of a right to carry on business shall be Nil. Though s. 55(2)(a) as amended by the FA 1997 w.e.f. 1.4.1998 referred to a right to manufacture, produce or process any article or thing, that would not cover a non-compete covenant. For AY 2003-04 & onwards, a non-compete fee received by a person associated with the transferor is taxable as business profits u/s 28(va)(a) as being a payment for not carrying out any activity in relation to any business. A non-compete fee received in an earlier year is not chargeable to tax in view of Guffic Chem vs. CIT 320 ITR 602 (SC);
 
(ii) On facts, the consideration of Rs. 11 crores received by the assessee was not for sale of any business nor was it for not carrying on any business which he was carrying on, which he had transferred. It was also not a payment for a right to manufacture, produce or process any article or thing. The sum was not paid for transfer of any intangible right in respect of manufacture, production or process of cement. Accordingly, the capital gains provisions were not attracted. The amount was paid for not carrying out any activity in relation to any business and would fall within the ambit of s. 28(va)(a). However, as s. 28(va) came into effect in AY 2003-04, the receipts was not chargeable to tax in AY 2000-01.
 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Application Management Solutions Application Management System Application Management Software System Application Management Development Application Management Software Development

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions