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2012 (12) TMI 290 - AT - Income TaxDisallowance of Non-Compete Compensation - held that:- Expenditure incurred in warding off competition in the business even to rival dealer will constitute capital expenditure and to hold it as capital expenditure, it is not necessary that non-compete fee be paid to create monopoly rights. Thus, Amount paid for non-compete fees is considered as capital outlay, the same cannot be allowed as the revenue expenditure u/s 37(1). Moreover since the amount is not in the nature of revenue expenditure, a part of it cannot be considered as deferred revenue expenditure so as to allow over period of non-compete agreement. In view of this, assessee's contention cannot be accepted - ground raised by assessee is dismissed and confirm the action of AO in this regard - In the result, appeal filed by assessee is dismissed. Amount paid as non-compete fee being capital out lay, can not be allowed as revenue expenditure Decision in Tecumseh India Pvt. Ltd. Versus Addl. CIT [2010 (7) TMI 685 - ITAT, DELHI] followed.
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