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2019 (4) TMI 1236 - HC - Income TaxPayment of non-compete fees - allowable revenue expenditure u/s 37 or capital expenditure - whether payment was made by the assessee not only for acquiring an enduring benefit by stopping the erstwhile promoters in competing with the assessee in similar line of business but also to consolidate its business and therefore the same expenditure is a capital expenditure? - HELD THAT:- Tribunal considered the expenditure in question as revenue expenditure and granted the entire benefit for the year under consideration itself. In the case of M/s. Everest Advertising Pvt. Ltd. [2015 (1) TMI 968 - BOMBAY HIGH COURT], the Division Bench of this Court had granted similar benefit in the case where the non-compete agreement was for a period of three years. The Madras High Court in the case of Asianet Communications Ltd. V. Commissioner of Income Tax, Chennai [ 2018 (8) TMI 1554 - MADRAS HIGH COURT ] also treated the expenditure as revenue in nature in a case where the non-compete agreement was for a period of five years holding that the same did not result into any enduring benefit to the assessee. Looking to the nature of non-compete agreement, as also the duration thereof, the Courts have recognised such expenditure as Revenue expenditure. In the present case, the assessee had executed subject agreement with the promoter of the Company to avoid immediate competition. The business of the assessee company continue. No new business was acquired. The benefit therefore was held by the Tribunal instantaneous. Tribunal was justified in treating the said payment of non-compete fees as revenue expenditure - Decided against revenue
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