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2010 (7) TMI 685 - AT - Income TaxDisallowance - Capital or revenue expenditure - non-compete fee, Professional fees paid to architect, fee paid to Registrar of Companies - assessee is wholly owned subsidy of Tecumseh Product Company Michigan, USA -The non-compete agreement was part and parcel of the whole transaction and cannot be treated to be a separate transaction - It was not a part of the working of the business, but went to appreciate the whole of the capital asset and make it more profit yielding - it can be seen that warding off competition in business even to a rival dealer will constitute capital expenditure and to hold them capital expenditure it is not necessary that non-compete fee is paid to create monopoly rights – Held that: expenditure of ₹ 2.65 crore claimed by the assessee in pursuance of non-compete agreement dated 10th July, 1997 are capital expenditure, the deduction of which cannot be granted to the assessee as revenue expenditure The assessee has increased its authorized share capital and for that purpose it has incurred an expenditure of ₹ 39,90,120/- being on account of fee paid to Registrar of Companies - The contention of the assessee is that the increase in the share capital was to meet the needs for working capital - C.I.T.(A) has observed in his order that for the assessment year 1990-91 a similar issue had arisen and the claim for deduction of the assessee was disallowed – Appeal is allowed by way of remand to AO Since that payment was made to an Architect, the same was held to be capital expenditure and accordingly added to the income of the assessee - Ld. AR also did not submit any details before us as the same was specifically asked for and in the absence of such details, after hearing both the parties on this issue we decline to interfere in the findings of the CIT (A) vide which such addition has been upheld and benefit of depreciation is denied – Decided against the assessee
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