The appellant was whole time Director. In view of his capabilities and knowledge and in order to ensure that appellant did not act/harm the interest of the company upon termination of his employment, the company entered into non-compete agreement dated termed as Deed for Negative Covenants imposing certain restriction on appellant from carrying out certain professional activities over a period of 10 years after the termination of his employment. In lieu of appellant agreeing not to compete with the company for a period of 10 years after termination, under Article 2 of the agreement the company agreed to pay Rs.2 Crores to appellant. The company satisfied such payment by allotting 20,00,000 Equity Shares of the nominal face value of Rs.10 each to appellant. The Assessing Officer assessed the amount as perquisite under section 17(1)(iv read with section 17(3)(i) of the Act. The addition was affirmed by the CIT(A) and Tribunal. On appeal the court held that the agreement expressly provides that appellant shall not directly or indirectly engage in or be concerned or connected with any business which is similar to and/or in competition with the business of the company in the metro cities of Bombay, Delhi, Ahmedabad and Bangalore and appellant shall not directly or indirectly control or operate or cause to control or operate or participate in any similar business in the metro cities. In fact, the agreement goes to the extent of even stating that appellant shall not associate himself or be an advisor, employee or be a partner in any similar business as that of the company and he shall cease and desist from participating in similar business activities as that of the company and not to use his goodwill or expertise in respect of similar business as that of the company. To that extent, in our view it was loss of source of income for him in the future. The agreement, i.e., the deed for negative covenants was an independent obligation undertaken by appellant with the company in same field for a period of ten years. Therefore, the compensation attributable to restrictive covenant, i.e., 20,00,000 Equity Shares of Rs.10/-each in the hands of appellant was a capital receipt in as much as it was appellants’ profit making capabilities for a period of ten years from the date of appellant leaving the employment of the company either on his own or in association with professional competitors. Appeal was allowed.  Followed  Guffic Chem P. Ltd. v. CIT  (2011)  332 ITR 602 (SC) (AY. 2003-04). As the appeal was allowed, the Writ petition of the appellant was dismissed.