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2012 (4) TMI 440 - HC - Income TaxAddition to income on account of non-deduction of TDS in terms of section 40(a)(ia) – Held that:- The tenor and purport of the terms of the agreement were that it was not a case where the licensee was doing any work for the assessee even within the wider meaning of the term “any work” as defined in Section 194C - assessee running a study centre through various licensees or franchisees and the agreement is not for making any payment to the licensee for any work done for the assessee and that it was a case of sharing of fees for carrying out respective obligations under a contract – in favour of assessee. Claim of interest paid to the Noida Authority on account of purchase of land -allowable as revenue expenditure u/s 36(1)(iii) of the Act – Held that:- In order to claim allowance in respect of interest, there should be borrowing of capital and that unpaid purchase price of an asset does not amount to borrowing of capital, though a debt may be created - the interest was paid to Noida Authority not in respect of any capital borrowed from that Authority, but on the price of the plot remaining unpaid as per the provisions of the lease deed - there being no “capital borrowed”, the interest is not allowable as a deduction u/s 37(1) – against assessee. ITAT deleted addition made by the AO on account of disallowance of bonus paid to the Directors in terms of Section 36(1)(ii) – Held that:- It was observed in the Bombay High Court case Metplast Pvt. Ltd vs DCIT (2011 (12) TMI 320 - Delhi High Court ) that so long as the bonus or commission is paid to the directors for services rendered and as part of their terms of employment it has to be allowed and sec.36(1)(ii) does not apply – in favour of assessee. Claim of Non-compete fee payable as revenue expenditure solely on the basis of agreement period and the mode of payment – Held that:- The period for which the assessee sought to eliminate competition was only 12 months which was too short a period to be considered as conferring an enduring benefit to the assessee and the non-compete fee was to be paid to the two persons in equal installments over a period of time – in favour of assessee.
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