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2018 (8) TMI 1803 - HC - Income TaxPayment of non compete fee - fee incurred to have been paid to an employee restraining him for doing the particular business/work/job etc. for a particular period - nature of expenditure - whether revenue expenditure and an allowable deduction OR capital expenditure ? - CIT(A) deleted the addition/disallowance upheld by ITAT - HELD THAT:- Tribunal relied upon its earlier decision in the case of the assessee for the assessment year 2000-01 [2013 (11) TMI 1233 - ITAT AMRITSAR] wherein it was recorded that non-compete fee was payable by the assessee to safeguard its business interest. It was further recorded that whether expenditure had been incurred for business purposes or not was to be viewed from the point of view of the businessman. Reliance was placed on judgment of the Apex Court in SA Builders vs. CIT and another, [2006 (12) TMI 82 - SUPREME COURT] holding that the expression ‘commercial expediency’ was an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation but yet it is allowable as business expenditure if it was incurred on the ground of commercial expediency. since on the issue whether the expenditure was of revenue or capital in nature, two opinions were possible, therefore, the view taken by the CIT(A) was upheld. Thus, the Tribunal in the present case of the assessee for the assessment year in question rightly upheld the order passed by the CIT(A) holding the payment of non-compete fee to be allowable as revenue expenditure. - Decided in favour of assessee.
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