Law:

Section:

2008] 305 ITR 181 [2009] 177 TAXMAN 154 (MP) HIGH COURT OF MADHYA PRADESH, GWALIOR BENCH Commissioner of Income-tax v. Shyam Sundar Chhaparia* ABHAY GOHIL AND SANJAY YADAV, JJ. M.A.I.T. NO. 2 OF 2007 APRIL 22, 2008 Section 4, read with section 17(3), of the Income-tax Act, 1961 - Income - Chargeable as - Assessment year 2001-02 - Assessee was an employee of 'G' Ltd. and at time of retirement, he was holding position of Executive President - As Executive President, assessee attained considerable knowledge and special expertise and huge work experience of various industrial units run by 'G' Industries - Thus, after retirement assessee was granted certain amount as special compensation in lieu of an agreement for restraining him to take up any employment activities or consultation which would be prejudicial to business/interest of 'G' Ltd.- Assessee showed said amount as capital receipt in his return, being compensation for not taking up any competitive employment under a restrictive covenant- Assessing Officer rejected assessee's claim and held that amount so received was liable to tax - Commissioner (Appeals) as well as Tribunal, however, allowed assessee's claim - On instant appeal, it was seen that there was severance of master-servant relationship and no material was brought on record by revenue to suggest that there existed a service contract providing therein a restrictive covenant preventing thereby assessee to take up any employment, activities or consultation which would be prejudicial to business/interest of 'G' Industries - It was also noticed that amount-in-question could not be termed as 'profit in lieu of salary', because it was not any compensation due to or received by an assessee from his employer or partner-employer at or in connection with termination of his employment - Whether, in aforesaid circumstances, amount received by assessee being solely as compensation for his agreement not to take up any competitive employment/assignment in future, could not be brought to tax - Held, yes CASES REFERRED TO CIT v. Captain H.C. Dhanda [1970] 76 ITR 404 (MP) [Para 14], Hunter (H.M. Inspector of Taxes) v.Dewhurst [1932] 16 TC 635 (CA) [Para 14],…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492