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Sum received from sale of rights of ‘Technical Concept’ to safeguard website is taxable u/s 28(va)

March 20, 2019[2019] 103 315 (Ahmedabad - Trib.)

IT : Where a technical concept was conceptualized by assessee-employee to safeguard websites from getting infected with malware against consideration and thereafter, an agreement was entered into between assessee, employer-Indusface India, Indusface Canada, and Trend Micro USA, for sale of all rights in concept so developed/against consideration and claim of assessee was that amount received by assessee from Trend Micro was a capital gain in his hands, but as it had no cost of acquisition, this capital gain was not taxable in nature, since a perusal of Asset Purchase Agreement clearly shows that dominant intention of purchaser for making payment to assessee was to prevent him from engaging in any business which could have competed with business purchased by Trend Micro from sellers, amount received by assessee is revenue receipt in his hands and is taxable as business income under section 28(va). Further, in any case, cost of acquisition, in case of non compete rights, under section 55(2)(a) is to be taken as NIL, and, as a corollary thereto, entire receipts is to be taxed in hands of assessee

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