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2005 (1) TMI 620 - ITAT CHENNAIDeduction towards payment of non-compete compensation - Whether this period of five definite years gives ending benefit to the assessee has also to be seen - Payment of fees for increasing the capital structure of the company by issuing shares. HELD THAT:- The restrictive covenant was thus for a period of five definite years. The payment also made by the assessee to ward off the Competition for a definite period of five years. Which accordingly to the Revenue gave enduring benefit to the assessee. Therefore, the expenditure clearly falls in Capital field is the vehement argument of the learned DR. We are of the view that the assessee who is saddled with the duty to establish that the expended amount falls in the Revenue field. Admittedly the payment was for the purpose of business of the assessee. The payment was expended to ward off the Competition in the field of assessee’s business. 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-DR have to be accepted. 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. In our view, the facts which the learned representative of the parties pleaded and put forth tends us to take the firm view that the payment of non-compete fee falls within the capital field which is not an allowable expenditure. The order of the authorities are well supported by the cantena of decisions of Hon’ble Supreme Court and the Hon’ble High Courts. We therefore, confirm the order of the authorities. The assessee’s claim therefore, fails. Payment being the fees for increasing the capital structure of the company by issuing shares. Both parties admit before us that on this issue of the shares there increased of their capital base of the assessee. That being the case, the decision of the Hon’ble Supreme Court in the case of Brooke Bond (India) Ltd. v. CIT[1997 (2) TMI 11 - SUPREME COURT] is squarely applicable to the case present before us. Therefore, we decline to interfere on this finding of the authorities below. In the result, the appeal of the assessee is dismissed.
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