CA 1967, 44 TC 175; [1967] CH 1038; [1967] 2 ALL ER 980
ICI granted licences or sub-licences to seven overseas companies for the use of certain patents relating to man-made fibres The agreements provided that the company would provide technical assistance and that, in return for lump sums payable in instalments, it would not for a period sell or manufacture similar products in the territories of the licensees. The Inland Revenue assessed these payments as trading income and the company appealed, contending that the lump sum payments in respect of the covenants against competition were capital receipts.
It was held that the payments were capital in nature and, therefore, not assessable as trading income since the licences were part and parcel of transactions which, taken as a whole, constituted dispositions by the company of part of its fixed capital.
