AAR held that the receipts arising out of a negative covenant not to carry on a business were taxable as business income under section 28(va) . S.28(va) of the Act nowhere provides that the recipient of non-compete fee must already be carrying on business which he has agreed not to carry on further. The section applies to any person who has received or is entitled to receive a sum in consideration for agreeing not to carry out any activity in relation to any business and is not restricted to only that business which he was already carrying on. Whether the receiver of the non-compete fee was carrying on any business or whether he was carrying on the same business or a different business than that of the payer of the non-compete fee or the transferor of shares, etc. was totally irrelevant while considering taxability under section 28(va)(a) .AAR also held that  in the absence of any permanent establishment of the applicant in India, such business income would not be taxable in India by virtue of article 7 of the DTAA. There was no transfer of any capital asset hence not liable to capital gains tax