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TMI Blog2005 (1) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... de two agreements on the same day. The details are as under : Date of Agreement Name of Recipients Amount paid (1) 3-5-1999 (1)Mr. S. Sasikumar Rs. 6,00,00,000 (2)Smt. Radhika Menon (2) 3-5-1999 (1)Mr. Sasikumar (2)Mrs. Radhika Menon Rs. 4,50,00,000 (3)Mr. P. Bhaskaran Both the authorities rejected the claims of the assessee under section 37(1) of the Income-tax Act. Aggrieved on this the assessee is in appeal and this issue is the first issue agitated before us. 3. We have heard the learned counsel for the assessee and the learned Commissioner of Income-tax - Departmental Representative Mr. J. Vinay Kumar for the Department. We have carefully perused the materials and the preced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... character it should not be so transitory and ephemeral that it can be terminated at any time at the volition of any of the parties." 5. The Hon'ble Apex Court in the case of Devidas Vithaldas & Co. v. CIT [1972] 84 ITR 277 observed : "Payments to ward off competition would constitute capital expenditure provided the object is to derive an advantage by eliminating the competition over some length of time but such a result would not follow if there is no certainty of duration for such an advantage and the same could be put an end to at any time. Thus, what the extent of durability of permanence should be depends on the facts of each case." 6. The Hon'ble Jurisdictional Madras High Court in Chelpark Co. Ltd. v. CIT [1991] 191 ITR 249 Their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee. The decision of the Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. (supra) the decision was rendered under a given circumstances whether the expenditure would fall in the side of revenue or in the capital field. The case of G.D. Naidu (supra) also does not support the case of the assessee. In this, there were two payments and the Hon'ble High Court found that the payment of one given to ward off competition is not in Capital field as there is no enduring benefit. The decision of the Hon'ble Supreme Court in the case of CIT v. Coal Shipments (P.) Ltd. [1971] 82 ITR 902. 9. In fact the decision of the Hon'ble Madras High Court in the case of Chelpark Co. Ltd. ( supra) discussed the all case Laws and decided the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes and/or group companies or firms do any business of, and/or provide any service, assistance or support of any nature whatsoever related to any business which may directly or indirectly compete with the said Business, either to any competing party or any other person or entity, (ii)share, sell or use any information or knowledge in their possession regarding the business of the Company its customers, its sub-agents, its business characteristics, trends, history, prospect list and related and incidental information of any manner whether directly or indirectly, to or with any person or entity, in any manner detrimental to the Company, without the specific prior written permission of the person authorised in writing to represent the ACL Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business for the definite period of five years. In our view, the contention of the learned CIT-Departmental Representative have to be accepted. The decisions relied on by the learned Departmental Representative clearly supports the stand of the Revenue's authorities. We are also of the view that the non-compete fee payment made by the assessee to Mr. Sasikumar group gave enduring benefit to the assessee in its business. The decision of the Hon'ble Jurisdictional High Court in the case of Chelpark & Co. comes to the help of Revenue. The decision of the Hon'ble Madhya Pradesh High Court in the case of Grover Soap (P.) Ltd. v. CIT [1996] 221 ITR 299 also reinforces the claim. While deciding the same the Hon'ble Madras High Court considered al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re charges are not hit by the purview of the provisions of section 40(a)( i). Under the circumstances, by quoting the Commissioner of Income-tax (Appeals)'s order dated 29-7-2002 referred by the Assessing Officer, the Assessing Officer was of the opinion that the assessee's claim of TDS payments of this year is not permissible and therefore, he disallowed it. 12. On appeal, on this issue before the Commissioner of Income-tax (Appeals), the assessee has not proved the case as observed by the learned CIT(A). Before us also the learned counsel for the assessee could not controvert the finding of the learned CIT(A). Therefore, we reject the arguments of the learned counsel and the grounds urged on this. 13. The other issue on the deduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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