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Informative

Non-Compete Fee to be treated as Revenue Receipt from Post-Amendment to S.28 of Finance Act: ITAT [Read Order]

Update / Judgement Date

10 Jun 2024

Source

Taxscan

Author

Team — WCP Legal Desk

Reading Time

1 min read

Income Tax

The Mumbai ITAT ruled that non-compete fees received by Lyka Labs Ltd. are revenue receipts post-amendment from April 1, 2003. Initially treated as capital receipts, the CIT(A) upheld this stance until FY 2003–04. The tribunal noted that the amendment to Section 28(va) of the Finance Act, 2002 only applied from April 1, 2003, onwards, making pre-amendment non-compete fees capital receipts. \r


The bench, comprising Kavitha Rajagopal and Om Prakash Kant, affirmed the CIT(A)'s decision, finding no fault in treating non-compete fees as capital receipts before April 1, 2003.