Non-Compete Fee Paid to Protect Business is Revenue Expenditure: SC

Sharp Business System Vs CIT (Supreme Court of India) SC: Non-compete payments aid business efficiency, create no asset; Allowable as revenue expenditure u/s 37(1) In Sharp Business System v. CIT, the Supreme Court held that non-compete fees paid to facilitate business operations do not create a capital asset and are allowable as revenue expenditure under Section 37(1) of the Income-tax Act. The assessee, a joint venture between Sharp Corporation, Japan, and Larsen & Toubro Ltd. (L&T), paid ₹3 crore to L&T under a non-compete agreement restraining it from engaging in competing of...