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2018 (3) TMI 1655 - AT - Income TaxDepreciation on non compete fee - Treatment of non-compete fee as an intangible asset - eligible for depreciation @ 25% - Held that:- For the ownership of the intellectual property or know-how or license or franchise, it would be unable to either access the advantage or assert the right and the nature of the right mentioned or spelt-out in the provision as against the world at large or in legal parlance "in rem". However, in the case of a non-competition agreement or covenant, it was held that the advantage was a restricted one, in point of time. It did not confer any exclusive right to carry-on the primary business activity. The right can be asserted in the present instance only against L&T and in a sense, the right "in personam". Every species of right spelt-out expressly by the Statute – i.e. of the intellectual property right and other advantages such as know-how, franchise, license etc. and even those considered by the Courts, such as goodwill can be said to be alienable. Such was not the case with an agreement not to compete which is purely personal. As a consequence, it is held that the contentions of the assessee are without merit.’ It is further pertinent to note that the Hon’ble Delhi High Court in Sharp Business System VS. CIT (2012 (11) TMI 324 - DELHI HIGH COURT) while deciding this issue against the assessee, has also considered in Techno Shares & Stocks Ltd. VS. CIT [2010 (9) TMI 6 - SUPREME COURT OF INDIA] which was the foundation of the CIT(A)’s decision. CIT(A) was not justified in granting depreciation on the amount of non-compete fee. The impugned order is, therefore, overturned and the action of the AO is restored. - decided against assessee.
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