https://www.taxtmi.com/caselaws?id=361790 A non-compete fee received under a share purchase agreement was treated as consideration for a restrictive covenant and therefore as business income under section 28(va) of the Income-tax Act. The AAR held that, as a shareholder, the recipient had no legally enforceable right to carry on the company's business and no capital asset of that kind was transferred, so capital gains treatment did not apply. It further held that section 28(va) does not require the recipient to have carried on the same business earlier, and the proviso for transfer of the right to carry on business was inapplicable. As the income was business profit and there was no permanent establishment in India, Article 7 of the India-UK DTAA made it taxable only in the State of residence. en-us Wed, 06 Jun 2018 00:00:00 +0530 Tue, 24 Jul 2018 18:48:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=361790 A non-compete fee received under a share purchase agreement was treated as consideration for a restrictive covenant and therefore as business income under section 28(va) of the Income-tax Act. The AAR held that, as a shareholder, the recipient had no legally enforceable right to carry on the company's business and no capital asset of that kind was transferred, so capital gains treatment did not apply. It further held that section 28(va) does not require the recipient to have carried on the same business earlier, and the proviso for transfer of the right to carry on business was inapplicable. As the income was business profit and there was no permanent establishment in India, Article 7 of the India-UK DTAA made it taxable only in the State of residence. Case-Laws Income Tax Wed, 06 Jun 2018 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=361790