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2012 (8) TMI 769 - ITAT, HYDERABADPenalty u/s 271(1)(c) - dis-allowance of management fee - business expediency - Held that:- Confirming the quantum addition or acceptance of the quantum addition itself cannot be a reason for levy of penalty. Assessment proceedings and penalty proceedings are two different proceedings and one is not substitute to the other. To levy penalty u/s. 271(1)(c), there should be conclusive evidence to prove that there is concealment of income or furnishing of inaccurate particulars of income. Where the assessee came forward with additional income though after deduction on account of that the assessee was not in a position to explain properly, and express remorse, in its conduct un-hesitantly, the Assessing Officer might have to exercised the discretion in favour of such assessee as otherwise the expression ‘may’ in section 271(1)(c) of the Act remains redundant. If it is to be understood that in a case of admitted concealment penalty is not automatic. The case before us is most befitting case to exercise such discretion, particularly there is divergence of opinion about the issue. Payment of Non-compete fees - revenue expenditure vs capital expenditure - Held that:- Payment was made to a rival company to ward off competition in business. However, by making this payment, the assessee has not derived any advantage of enduring nature to hold the expenses as capital in nature. The agreement was only for a limited period of 3 years. Said payment was made for the purpose of running the business and not for the purpose of acquiring the business. The expenditure incurred was not related to the acquisition of an asset or a right of permanent character or an advantage of enduring nature. Such expenditure cannot be, therefore, held as capital expenditure and has to be allowed as revenue expenses u/s 37 - Decided in favor of assessee
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