IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER &

SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER I.T.A. No. 5784/Mum/2024 A.Y: 2013-14 Ankit Raj Organo Vs DCIT, Range 14(1)(1)

Chemicals Ltd., Aayakar Bhavan

201, Trimurti Arcade, Mumbai.

LBS Marg, Ghatkopar West, Mumbai - 400086 PAN – AACCA2701M (Appellant) (Respondent)

Assessee by Shri Dharan Gandhi Revenue by Shri Surendra Mohan Date of Hearing 23.12.2025 Date of Pronouncement 23.03.2026

ORDER

Per: SHRI. SANDEEP GOSAIN, J.M.:

The present appeal has been filed by the assessee challenging the impugned order dt. 16.10.2024 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment year 2013-14. The assessee has raised the following grolls of appeal.

1. The Ld.AO has wrongly added back Employee contribution

towards Provident Fund aggregating to Rs.16,299/-, and CIT

(A) (NFAC) CIT (A) erred in confirming the same.

2. The Ld. AO ought to have appreciated that the non compete

fees of Rs.60,00,000/- are paid for effectively running the

business and to avoid the competition by the recipients of non

compete fees. The Ld. AO ought to have appreciated that the entire non compete fees are offered for taxation by the recipients of non compete fees. and CIT (A) (NFAC) also erred in confirming the same.

1. The Ld. AO erred in disallowing the unsecured loan of Rs.30,00,000/- borrowed by the appellant despite the fact that the appellant has fully discharged the identity, genuineness and creditworthiness of the lender in terms if sec.68 of the Income Tax Act, 1961.t

2. Ground No.1 raised by the assessee relates to challenging the order of Ld. CIT(A) in confirming the addition of Rs. 16,299/- towards Employee Contribution Provident Fund.

In this regard it was submitted that this issue is squarely covered by the decision of Hon'ble Supreme Court in the case of the Checkmate Services (P.) Ltd. vs. CIT (1) [2022] 448 ITR 518 (SC), in favour of the Department and against the assessee.

3. Thus, considering the facts of the case and also the decision of Hon'ble Supreme Court, we dismiss this ground raised by the assessee. Ground No. 2 raised by the assessee relates to challenging the order of the ld. CIT(A) in upholding the order of AO in disallowing the non-

compete fee paid to the director.

4. After having heard the parties, we found that the AO had disallowed the non-compete fees paid to two directors by holding that:

i) non compete fees was being paid actually to the directors/shareholders who continue to be activity engaged in the affairs of the company. However, in the present case, the directors Vijay Mithani and Upendra Mithani have decided to sever their relation with Assessee company with an intention to start a new business so as to claim a non compete compensation for the same.

ii. Even the nature of business in the present case of the assessee is that of trading of alcohol. This business is not a specialized business which requires any specialized expertise knowledge or technique. Therefore, there is no rational for paying non-compete fee by the assessee company to its directors who are also the shareholders since the basic concept of payment of non-compete compensation is to prevent someone from using trademark, license, manufacturing secret, or any other technical skill which is an asset to the company, whereas the facts in this case are entirely different.

iii. Even otherwise, such payment cannot be considered as remeration as TDS was deducted u/s. 194 @ 2%

5. From the records and after analyzing the facts, we noticed that there is a valid agreement for payment of non- compete fees with the directors i.e., Vijay V. Mithani and Upendra Mithani executed on executed on 01 April 2009. The same are at paperbook page no. 144 and 148. The agreement is for a period of four years and it states that the parties shall be bound by the non-competition covenants for a period of four years beginnin