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2018 (8) TMI 1554 - HC - Income TaxAllowable deduction in computing the income - consideration paid by the appellant to Mr.SK for the non-competing covenant - Held that:- The non-compete compensation, from the stand point of the payee of such compensation, is so paid in anticipation that absence of a competition from the other party to the contract may secure a benefit to the party paying the compensation. There is no certainty that such benefit would accrue. Inspite of the fact that a competitor is kept out of the competition, one may still suffer loss. If it were to be a capital expenditure whether or not, an assessee makes a business profit, the character and value of the capital assets will, subject to depreciation, remain unaltered. Thus, the facts clearly disclose that on account of the payment of non-compete fee, the assessee has not acquired any new business, profit making apparatus has remained the same, the assets used to run the business remained the same and there is no new business or no new source of income, which accrue to the assessee on account of the payment of non-compete fee. Apart from that the stand taken by the Revenue that the petitioner had amortised expenditure spread over for the period of five years has been found to be factually incorrect, as the assessee has not capitalised the same in their accounts, but treated it as deferred revenue expenditure for a period of five years. That apart, such issue was never raised by the Revenue before any of the lower authorities, as the Tribunal has recorded that there is no dispute regarding the facts.- Decided in favour of the assessee and against the Revenue. Disallowance of claim for deduction of the payment - disallowance under Section 40(a)(i) - Held that:- The transponder hire charges made by the appellant on which no tax has been deducted does not come under the purview of either Royalty or Technical Fees on which tax has to be deducted. Accordingly, no disallowance under Section 40(a)(i) is warranted on those payments. Therefore, the CIT(A) held that the TDS payment claim made by the assessee to the extent of ₹ 15,68,69,040/- is prima facie not an allowable expenditure, when the assessee is not required to deduct any TDS on payment of transponder charges and so the payment itself is not covered by Section 40(i)(a) of the Income Tax Act. Thus, the assessee's claim for TDS payment for the year 2000-01 was held to be not permissible and the same was disallowed. The reason for disallowing this deduction was as a result of the decision in the assessee's own case for the assessment year 1995-96.
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