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2022 (7) TMI 587 - AT - Income TaxAllowability of non-compete fee paid in terms of the consultancy agreement entered by the appellant company - AO had doubted the sum and substance transactions and held that the payment was made as part and parcel of purchase of shares of the appellant company - AO was of the opinion that this non-compete fee was paid as part of obligation stipulated in the agreement to purchase of shares of the appellant company - HELD THAT:- As the case of the Assessing Officer appears to be that the non-compete consideration is nothing but a part of the consideration payable for acquisition of shares of the appellant company and, therefore, any consideration paid for acquisition of shares cannot be allowed as revenue deduction while computing the business profits as taxable. This finding made by the Assessing Officer remains uncontroverted by leading necessary evidence on record. Further, admittedly, the expenditure was incurred in terms of the agreement entered between Shri Ajay Pitre and the appellant company on 09.04.2013. Therefore, in terms of the said agreement, the liability had clearly crystallized during the financial year 2013-14 relevant to the assessment year 2014-15 and had not incurred during the assessment year 2017-18. Thus, the assessee company had also failed to satisfy the conditions precedent to claim as revenue expenditure, as the expenditure was incurred during the previous year relevant to the assessment year under consideration, therefore, the claim made by the assessee cannot be allowed as deduction for the reasons stated above. Accordingly, the grounds of appeal raised by the assessee stands dismissed.
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