TMI Blog2005 (1) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... ents 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of each individual case. Although an enduring benefit need not be of an everlasting 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1980] 124 ITR 1 . 8. On careful perusal of the decisions, we are unable to accept the contention of the learned counsel 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jointly with or as manager/agent/consultant or employee or otherwise directly or indirectly by themselves or through any of their relatives or associates 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 en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Admittedly this restriction to compete or in other words the non-compete fee was paid by the assessee to Mr. Sasikumar Group to retrain them from the competitive 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 Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee stands is legally and factually incorrect. In the assessment year 1995-96, the assessee-company won the case that the payment to Mr. Menon U.K. Ltd. as transponder hire 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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