2016 (7) TMI 575

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....1151 of 2008 and 1188 of 2008 have been filed by the revenue. Tax Appeal No. 800 of 2013 has been filed by the assessee against the order of the Tribunal has allowed the appeal preferred by the assessee partly. 2. While admitting the appeals, so far as Tax Appeal Nos. 1151 of 2008 and 1188 of 2008 are concerned, this court has framed the following substantial questions of law: "(i) Whether on the facts and circumstances of the case and in law, was the Appellate Tribunal right in holding that provisions of section 28(iv) are not applicable in the case of assessee? (ii) Whether on the facts and circumstances of the case and in law, was the Appellate Tribunal right in not holding that the amount of non-compete fees received by the ass....

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....on 28(iv) of the Act was not applicable in the case of the assessee. Hence the revenue is before us. 7. Learned counsel for the appellant-revenue Mr. Sudhir Mehta has contended that the Tribunal has committed an error in allowing the appeal of the assessee whereby holding that that section 28(iv) of the Act was not applicable in the case of the assessee. He has further contended that the issue squarely falls within the scope of section 28(iv) of the Act. 8. Learned counsel for the respondent Mr. Patel has contended that the issue is covered by the decision of the Apex Court in the case of Guffic Chem (P.) Ltd. v. Commissioner of Income-tax reported in 332 ITR 602 where in paragraph No. 7 it is held as follows: "Two questions arose ....

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....on-competition agreement was a capital receipt, not taxable under the 1961 Act. It became taxable only with effect from 1.4.2003. It is well settled that a liability cannot be created retrospectively. In the present case, compensation received under Non-Competition Agreement became taxable as a capital receipt and not as a revenue receipt by specific legislative mandate vide section 28(va) and that too with effect from 1.4.2003. Hence, the said section 28(va) is amendatory and not clarificatory. Lastly, in CIT v. Rai Bahadur Jairam Valji (1959) 35 ITR 148 it was held by this court that if a contract is entered into in the ordinary course of business, any compensation received for its termination (loss of agency) would be a revenue receipt. ....