Sanjay Yadav, J.

1. The question of law involved in the present appeal under Section 260A of the Income Tax Act, 1961, preferred at the instance of the Revenue is as follows:

Whether during the assessment year 2001-02, the amount received by the respondent on cessation of employment with his employer will be exempted from payment of Income Tax under Section 17(3)(i) of the Income Tax Act?

2. The sum of Rs. 27,50,000 represents that payment to the assessee, Shyam Sundar Chhaparia, on October 21, 2000, as a "special compensation" for his agreement not to take up any competitive employment/ assignment in future as per the undertaking signed by him with the Aditya Birla group wherefrom he superannuated on September 30, 2000. The whole question here is, whether the money which the assessee so received after his retirement under a restrictive covenant as a special compensation, in respect of which he was assessed for the year 2001-02, part of his income for the year in question as contended by the Revenue or is it of a capital nature as held by the Tribunal.

3. Omitting what is contentious the following facts which are material to decide the issue involved have been taken from the fa