Case Law Details
Hindustan Coca Cola Beverages Pvt. Ltd. Vs ACIT (ITAT Delhi)
ITAT Delhi held that payment of compounding fee for violation of provision under the Motor Vehicles Act, 1988 and Rules are allowable as business expenditure under section 37(1) of the Income Tax Act.
Facts- The assessee in its appeal has challenged disallowance on account of non-compete fees; reversal of provisions towards bad and doubtful debts; amount paid for traffic, challans and deposit from customers.
Conclusion- Held that non compete fee was capital expenditure, resulting in benefit of enduring nature, and therefore, not an allowable as revenue deduction.
We have carefully perused the orders of the authorities below. Provision was created in the earlier year and it was written back in that year is not in dispute. The ld. CIT(A) has admitted that the issue in hand is a case of reversal of provision of which income has already been offered in the earlier year. Therefore, we fail to understand why the addition has been sustained by the ld. CIT(A).
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