IN HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 27.03.2015 ITA No. 436 of 2014 (O&M) Commissioner of Income Tax, Faridabad ----Appellant Versus M/s Heidelberg Cement India Ltd. -----Respondent Coram: Hon'ble Mr. Justice S.J. Vazifdar, Acting Chief Justice Hon'ble Mr. Justice Harinder Singh Sidhu 1. To be referred to Reporters or not? 2. Whether judgment should be reported in Digest? Present: Mr. Tajender K. Joshi, Advocate for appellant. **** S.J. VAZIFADAR, A.C.J. (Oral) CM-28984-CII-2014 For reasons recorded in application, delay of 120 days in re-filing appeal, is condoned. Civil Misc. Application is allowed. ITA No. 436 of 2014 This is appeal against order dated 28.02.2014 passed by Income Tax Appellate Tribunal, Mumbai (for short 'the Tribunal') allowing respondent's appeal against order passed by Commissioner of Income Tax (Appeals) confirming disallowance of `80.88 lacs paid as non-compete fee to Executive Director and treating same as capital expenditure. matter pertained to assessment year 2008-09. 2. non-compete fee was paid to respondent-Executive Director in ATUL KUMAR TRIPATHI terms of Article 5 of agreement between them. non-compete clause was 2015.04.01 11:01 I attest to accuracy and integrity of this document ITA No. 436 of 2014 (O&M) -2- operative only for period of one year. question whether such payment must be on capital or on revenue account is not question of law alone. It is question of fact and in any event, mixed question of law and of fact. 3. In present case, there is nothing to suggest that payment in consideration of non-compete clause, which was to operate only for period of one year, resulted in respondent acquiring asset of enduring nature. No reasons have been given to suggest that payment would be capital expenditure. 4. reliance upon Article 8 of agreement is not well founded. Article 8 was confidentiality clause. In any event, former Executive Director was bound to maintain confidentiality of any information acquired by him in course of his employment, which is not in public domain. Nor is reliance upon Article 9 of any relevance. It merely provided that all intellectual property in any work or material developed, discovered, invented, designed and/or authored by Executive Director, during course of his employment, with company, shall belong to and are absolute property of company. same having been created by Executive Director as employee of company was under contract of service and not under contract for services. intellectual property thus belonged to company in any event. 5. Thus, it is difficult to see how such provisions can be clubbed with clause containing non-compete agreement can bring about expenditure on capital account. appeal is dismissed. (S.J. VAZIFDAR) ACTING CHIEF JUSTICE (HARINDER SINGH SIDHU) JUDGE 27.03.2015 Atul ATUL KUMAR TRIPATHI 2015.04.01 11:01 I attest to accuracy and integrity of this document Commissioner of Income Tax, Faridabad v. M/s Heidelberg Cement India Ltd