Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (10) TMI 1223 - AT - Income TaxRevision u/s 263 - depreciation on non-compete fees - order erroneous and prejudicial to the revenue - Held that:- During the course of assessment proceedings, u/s 143(3) the AO vide questionnaire issued along with notice dated 26.06.2013 had called for explanation of the assessee to justify its claim of depreciation on non-compete fees. In reply to it, the assessee vide written submission dated 15.01.2014 had explained the basis on which it had claimed depreciation on non-compete fees. It is found that the AO had made adequate inquiry while allowing depreciation of ₹ 5,50,29,78,040/- out of the claim of ₹ 6,75,23,77,744/- made by the assessee-company in its revised return of income. The same is evident from para 9 of the assessment order dated 21.03.2014 made by the AO. We find that the assessee had filed a copy of (i) computation of depreciation admissible u/s 32(1)(ii) and (ii) details of licensing rights under the head “Intangible Assets”. Thus in the instant case the AO had made sufficient inquiries while allowing depreciation on non-compete fees. In the case of Ingersoll Rand International Ind. Ltd. [2014 (6) TMI 934 - KARNATAKA HIGH COURT] has held that whenever assessee makes payment of non-compete fee, commercial right comes into existence and therefore, that right which assessee acquires on payment of non-compete fee confers in him a commercial or a business right which is held to be similar in nature to knowhow, patents, copyrights, trade marks, licences, franchises and the commercial right so acquired by assessee unambiguously falls in category of an ‘intangible asset’ and, consequently, depreciation provided u/s 32(1)(ii) is to be allowed. In the case of Max India Ltd.[2007 (11) TMI 12 - SUPREME COURT OF INDIA] it is held that if two views were possible on the disputed issue on the day when the Commissioner passes the order, then the order u/s 263 is not tenable. AO had made necessary inquiries before allowing depreciation on non-compete fees and also the ground that two views were inherently possible on the same issue on the day when the Commissioner passed his order u/s 263, we are inclined to set aside the impugned order. - decided in favour of assessee.
|