JUDGMENT judgment of court was delivered by A. K. Menon J.-The above two appeals propose following questions which are termed as substantial questions of law: "I. Whether, on facts and in circumstances of case and in law, Tribunal erred in holding that amount received by appellant from Thermo was taxable as business income under provisions of section 28(va) of Act despite fact that appellant was not carrying on any business in relevant previous year? II. Whether Appellate Tribunal is correct in holding that carrying on of business is not pre-condition was chargeability under head'Profits and gains of business'? III. Whether, on facts and in circumstances of case and in law, Income-tax Appellate Tribunal erred in failing to appreciate that amount received by appellant does not fall within section 28(va) and amounts, at best, to transfer of right to manufacture or right to carry business, taxable under head'Capital gains'?" issues involved in both appeals are identical and arise out of noncompete and non-solicitation agreements entered into between assessees and one Thermo Electron India LLS Pvt. Ltd. few facts may be narrated before dealing with issues in present appeals: assessees in both appeals were directors of one Chemito Technologies Pvt. Ltd. ("Chemito"). On or about May 27, 2008, Chemito sold one of its divisions to company Thermo Electron LLS India Pvt. Ltd. ("Thermo"). Vide agreement dated June 2, 2008, said Thermo entered into agreements of non-compete and non-solicitation under which assessees agreed and undertook not to engage in any business directly or indirectly or otherwise be involved in activity which was similar to that of division sold to Thermo. For easy reference, we reproduce clause (1) of said agreement between appellant in Appeal No. 1257 of 2013 and Thermo: "1. Non-compete: In consideration of Thermo paying sum of Rs. 50,000,000 (rupees fifty million only) on completion date, Mr. Toshniwal hereby undertakes for himself and on behalf of their affiliates that for aggregate period of four (4) years from completion date, Mr. Toshniwal shall not, in any part of world where Thermo sells products of acquired business or products similar to those sold by acquired business, without prior written consent of Thermo, directly or indirectly, whether through affiliates or otherwise: (i) engage in any business, whether for profit or otherwise, involving production, development, manufacture, sale or distribution of products that are same as or similar to products produced developed, manufactured, marketed, sold or distributed by acquired business as of date hereof and/or during period of two (2) years prior to completion date; and (ii) assist third parties, whether as consultant, partner, administrator, advisor or otherwise in carrying out activities of acquired business as of date hereof:" assessees also agreed that for period of four years from appointed date, assessees shall not without prior consent of Thermo, directly or indirectly engage in any business of division sold to Thermo for period of four years. In consideration of said undertaking Thermo would pay to assessees sum of Rs. 5 crores and Rs. 2 crores, respectively. Assessing Officer passed assessment order dated September 30, 2011 under section 143(3) of Income-tax Act, 1961 ("the Act") stating that sum received by appellants were revenue receipts. assessees appealed before Commissioner of Income-tax (Appeals) who, vide order dated October 11, 2012, confirmed order of Assessing Officer and held that non- compete fee is taxable as income under provisions of section 28(va) of Act and not taxable as capital gains. Section 28(va) of Act reads as under: "(va) any sum, whether received or receivable, in cash or kind, under agreement for- (a) not carrying out any activity in relation to any business; or (b) not sharing any know-how, patent, copyright, trade mark, licence, franchise or any other business or commercial right of similar nature or information or technique likely to assist in manufacture or processing of goods or provision for services: Provided that sub-clause (a) shall not apply to- (i) any sum, whether received or receivable, in cash or kind, on account of transfer of right to manufacture, produce or process any article or thing or right to carry on any business, which is chargeable under head'Capital gains'; (ii) any sum received as compensation, from multilateral fund of Montreal Protocol on Substances that deplete ozone layer under United Nations Environment Programme, in accordance with terms of agreement entered into with Government of India." Being aggrieved by order of Commissioner of Income-tax (Appeals), assessees filed appeals before Appellate Tribunal, which while dismissing appeals, vide order dated January 16, 2013 (Anurag Toshniwal v. Deputy CIT [2013] 23 ITR (Trib) 112 (Mumbai)), held that carrying on business is sine qua non and taxable under section 28(i) of Act. Tribunal was of view that it is not necessary to carry on business in order to attract provisions of section 28(va) of Act. Mr. Pardiwalla, learned senior advocate appearing on behalf of appellant, contended that amount received by appellant could not be termed as revenue receipts since appellant received amount, vide agreement for non-compete and non-solicitation which provides that he would not engage in any business involving production, development, manufacture, sale or distribution of product similar to those produced by division which was sold to Thermo. He submitted that amount in hands of assessee was not long-term capital gains and that order passed under section 143(3) of Act after scrutiny was incorrect. He submitted that money had been received by assessee for agreeing not to carry on specified business for four years. He, therefore, submitted that order of Assessing Officer and apart from other fact finding authorities are incorrect. Mr. Pardiwalla submitted that in Income Tax Appeals Nos. 96 of 2012 and 126 of 2013 in case of Ramesh D. Tainwala v. ITO and Deputy CIT, respectively, this court has admitted above appeals. According to Mr. Pardiwalla, present case is no different and he is entitled to benefit of long-term capital gains. Mr. Pardiwalla also relied upon decision of this court in case of John D'souza v. CIT reported in [2009] 226 CTR 540 (Bom) wherein this court has held that amount was received by assessee for not carrying on certain activity. He had received compensation of Rs. 25 lakhs during financial year 2004-05 in respect of certain properties of which he was owner and some land related transaction was entered into with M/s. Goa International School (P) Ltd. Accordingly, amount of Rs. 25 lakhs was paid to assessee by Goa International School (P.) Ltd. since he would be deprived of his business and relatable income. Assessing Officer applied section 28(va)(a) of Act since amount was chargeable to tax and submitted that under section 28(va)(a), Assessing Officer was justified in holding that capital receipt was received as compensation and was not capital receipts which is provided under section 45(1) of Act. Relying upon aforesaid decision, Mr. Pardiwalla submitted that amount of Rs. 5 crores and Rs. 2 crores, respectively, amounted to capital receipts and claimed benefit of longterm capital gains. He further submitted that it is wrong to have applied provisions of section 28(va) and levied tax on amount of compensation paid for non-compete for reason that amount is not received for carrying on any business or transaction. According to Mr. Pardiwalla, Assessing Officer, Commissioner of Income-tax (Appeals) and Tribunal had erred in upholding application of section 28(va) of Act. Accordingly, he submitted that aforesaid questions are substantial questions of law, which require consideration by this court. Mr. Chhotaray, learned counsel appearing on behalf of Revenue, on other hand, submitted that amounts received by assessees were taxable in hands of assessees as receipts from business. According to him, amount is received as compensation for under agreement of non-compete and non- solicitation in relation to business activities, which has been transferred by assessee to said company Thermo Electron LLS India Pvt. Ltd. In support of his contention, Mr. Chhotaray relied upon decision in case of Guffic Chem P. Ltd. v. CIT and CIT v. Mandalay Investment P. Ltd. reported in [2011] 332 ITR 602 (SC) wherein it is held that prior to April 1, 2003, non-compete fee would bear character of property received. However, after said date, same amount is revenue receipt. In that case, hon'ble Supreme Court was dealing with judgment of Karnataka High Court wherein High Court held that compensation received under non-compete agreement can be treated as capital receipt. hon'ble Supreme Court then went on to determine whether payment under agreement not to compete is capital receipt or revenue receipt. Two questions arose for determination in that case, firstly, whether amounts received for loss of agency was in normal course of business and, therefore, it constituted revenue receipts and, secondly, whether amount received as compensation on condition not to carry on competitive business was in nature of capital receipt. It was held that payment of amount received as non competition fee under negative covenant was treated as capital receipt till assessment year 2003-04. It is only, vide Finance Act, 2002, which came into effect from April 1, 2003, said capital receipt was now taxable under section 28(va). Accordingly, court held that there is dichotomy between receipt of compensation by assessee for loss of business arising out of negative covenant and that compensation for loss of agency would be revenue receipt as noted in decision in case of Gillanders Arbuthnot and Co. Ltd. v. CIT [1964] 53 ITR 283 (SC). assessee in that case was dealing with explosives. That agency was terminated and by way of compensation, Imperial Chemical Industries (Export) Ltd. paid two fifths of commission accrued on past sales and took formal undertaking from assessee to refrain from selling or accepting any agency for explosives. This was considered by Supreme Court and it was held that said amount received for non-compete agreement was not taxable up to April 1, 2003 and, therefore, in that case, amount received is not liable to be taxed. It is clarified by Supreme Court that section 28(va) of Act was amendatory and not clarificatory and, therefore, amount received before said date was not taxable under section 28(va) of Act. Following aforesaid decision, we are of view that in present case, as well amount received by assessee was taxable under section 28(va) of Act. In present case, it is evident that had assessee not entered into agreement of non-compete, he would have earned amount from business carried on out of division which was sold to Thermo Electron LLS India Pvt. Ltd. It is sale of said division that has deprived him of income and part of sale consideration itself, he was required to execute agreement of non-compete and compensation received under said agreement was relatable on consideration for sale of business of division and, therefore, for these reasons also, we are of view that amount is taxable under section 28(va). Furthermore, in present case, both assessees have received amount pursuant to agreement dated June 2, 2008, that is well after April 1, 2003, and would be covered by provisions of section 28(va) of Act. We are, accordingly, of view that no relief can be granted to appellants. appeals do not raise any substantial questions of law and same are dismissed. No order as to costs. *** Arun Toshniwal v. Deputy Commissioner of Income-tax