Allowing the appeal of the assessee the Court held that ; the advantage of restraining the individuals from engaging in competition was in the field of facilitating its own business and rendering it more profitable. Since there was no increase in the fixed capital, the payment did not encroach in the capital field. The payments made towards restrictive covenants ensured the continued presence and support of the individuals in its business operations. It also ensured the credibility in public perception and reassured the potential investors that the performance of the assessee would remain optimum through such continued association. The test of enduring benefit could not be applied blindly without regard to the facts and circumstances that arose in a given case. The conclusion of the Tribunal that the payment of non-compete fees had an enduring benefit and was capital in nature did not take into account the commercial benefit received by the assessee. ( AY.1996 -97)