THE COMMISSIONER OF INCOME T vs. K.RAJIV

TCA.No.223 of 2021 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 22.3.2021 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MS.JUSTICE R.N.MANJULA Tax Case Appeal No.223 of 2021

The Commissioner of Income Tax, Chennai ...Appellant Vs K.Rajiv ...Respondent APPEAL under Section 260A of the Income Tax Act, 1961 against the order dated 16.6.2017 passed by the Income Tax Appellate Tribunal, Madras 'D' Bench, Chennai made in I.T.A.No.246/Mds/2017 for the assessment year 2002-03. For Appellant : Mrs.R.Hemalatha, SSC Judgment was delivered by

T.S.SIVAGNANAM

This appeal has been filed by the Revenue under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity) challenging the order dated 16.6.2017 made in I.T.A.No.246/Mds/2017 on the file of the 1/4 https://www.mhc.tn.gov.in/judis/ TCA.No.223 of 2021 Income Tax Appellate Tribunal, Chennai 'D' Bench ('the Tribunal' for brevity) for the assessment year 2002-03. 2. The Revenue has filed this appeal by raising the following substantial questions of law : “i. Whether the Tribunal was right in holding that the receipt of Rs.100 lakhs received by the assessee on account of non compete fee is to be treated as capital receipt especially when the fact remains that the amount paid is not for carrying on his regular business and the compensation is deemed to be his business income in the hands of the assessee, since such restrictive covenant was not entered into by Cital Aurobindo Bio-tech Limited, the assessee would have earned income from the said business ? ii. Whether the Tribunal ought to have applied the decision of the Karnataka High Court in the case of Shir Tam Tam Pedda Guruva Reddy reported in 291 ITR page 44 wherein it was held that the compensation received for restrictive covenant is to be treated as income and not as capital receipt in the hands of the assessee? and iii. Whether the Tribunal was right in holding that the receipt of Rs.100 lakhs 2/4 https://www.mhc.tn.gov.in/judis/ TCA.No.223 of 2021 received by the assessee towards non compete fee is to be treated as capital receipt especially when the same is to be treated as income under Section 28(via)?” 3. We have heard Mrs.R.Hemalatha, learned Senior Standing Counsel appearing for the appellant/Revenue. 4. The learned Senior Standing Counsel for the appellant submits that the above appeal is not pursued by the Revenue on account of the low tax effect in terms of Circular No.17/2019 dated 08.8.2019 issued by the Central Board of Direct Taxes. By the said Circular, the monetary limit for filing or pursuing an appeal before the High Court has been increased to Rs.1 Crore. It is further submitted that the tax effect in this case is less than the threshold limit. 5. In the light of the said submissions, the above tax case appeal is dismissed on account of the low tax effect. The substantial questions of law raised are left open. In the event the tax effect is above the threshold limit fixed in the said circular, liberty is granted to the Revenue to file a petition before this Court to restore the appeal to be heard and decided on merits. 22.3.2021 RS 3/4 https://www.mhc.tn.gov.in/judis/ TCA.No.223 of 2021 T.S.SIVAGNANAM,J AND R.N.MANJULA,J RS To The Income Tax Appellate Tribunal, 'D' Bench, Chennai. TCA.No.223 of 2021 22.3.2021 4/4 https://www.mhc.tn.gov.in/judis/