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2008 (3) TMI 429 - KERALA HIGH COURTCapital or Revenue Expenditure- The assesese a company engaged in plantation and construction activity. It deposited amount of 10 lakhs to Calcutta based company for appointing the assessee as a distributor of the company. Company at Calcutta never started the business thus after 10 years, the assessee agreed to abandon Rs. 3 lakhs on condition of payment of Rs. 7 lakhs by the Calcutta company. The assessee claim these 3 lakhs as deduction of business expenditure. Lower authorities and Tribunal reject the claim. Held that- the expenditure incurred was for acquiring the capital asset, that was an advantage of enduring nature in the form of distribution rights, when part of such capital asset is written off to retrieve the balance, obviously the written off part represented the capital outlay and therefore the assessee was not entitled to the deduction under section 37.
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