Section 28(ii)(a) — the law in short
What the courts have decided on section 28(ii)(a), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Shiv Raj Gupta v CIT
Supreme CourtHelps taxpayer
I sold my controlling stake and separately took a large non-compete fee. Can the department call the covenant a sham and tax the fee?
Not on these facts, and not for the year in question. The Supreme Court allowed the assessee's appeal and set aside the Delhi High Court's judgment. It held the High Court had gone outside the substantial question of law it framed, contrary to section 260A(4), by taxing the Rs 6.6 crore as capital gain when the only question framed was taxability under section 28(ii)(a). On the merits, the revenue has no business to second guess the commercial expediency of what parties at arm's length decide, and following Guffic Chem, a receipt under a negative covenant was a capital receipt not taxable before section 28(va) took effect on 1 April 2003.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
