2005 (5) TMI 253

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....venant and taxed by the AO as income from business and profession, was a capital receipt and not chargeable to tax. The short issue that we are really required to decide, therefore, is whether the compensation received by the assessee is capital in nature or is of revenue in nature. 3. The factual matrix of the case is like this. The assessee was managing director of a company by the name of M.C. Davar Aromatics Ltd. (MCDAL, in short), since inception but his association with the MCDAL ceased w.e.f. 2nd Sept., 1996. MCDAL had a collaboration agreement with a Swiss company by the name of Firemenich SA. As managing director of MCDAL, the assessee obviously had access to some sensitive information in the nature of trade secrets, company kno....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position. 5. As rightly concluded by the CIT(A), there appears to be no basis, save and except for the suspicion of the AO for AO's coming to the conclusion that this non-compete agreement between Firemenich and the assessee is only to avoid taxes and is, therefore, a sham agreement. On the other hand, there is overwhelming material on record to establish the factual background in which the said agreement was entered into. The assessee's close association with MCDAL and MCDAL being '"engaged in the manufacture, compounding, diluting, marketing and sale of fragrances, flavours and related systems pursuant to the age....