https://www.taxtmi.com/caselaws?id=798590 Compensation received for withdrawing a legal challenge and surrendering contractual pre-emptive rights over shareholding is capital in character where the rights enabled shareholders to acquire shares before transfer and their relinquishment impaired a capital asset and source of income. Although consideration for a non-compete covenant is taxable under Section 28(va) of the Income-tax Act, consideration for other negative covenants or surrender of rights to acquire or operate an asset remains capital. Payment by an acquiring entity does not alter its character. The contractual transfer restriction is not an impermissible absolute restraint under the Companies Act. The receipt is not taxable as business income or income from other sources. en-us Thu, 08 Jan 2026 00:00:00 +0530 Wed, 09 Sep 2026 08:20:29 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=798590 Compensation received for withdrawing a legal challenge and surrendering contractual pre-emptive rights over shareholding is capital in character where the rights enabled shareholders to acquire shares before transfer and their relinquishment impaired a capital asset and source of income. Although consideration for a non-compete covenant is taxable under Section 28(va) of the Income-tax Act, consideration for other negative covenants or surrender of rights to acquire or operate an asset remains capital. Payment by an acquiring entity does not alter its character. The contractual transfer restriction is not an impermissible absolute restraint under the Companies Act. The receipt is not taxable as business income or income from other sources. Case-Laws Income Tax Thu, 08 Jan 2026 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=798590