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2021 (8) TMI 185 - HC - Income TaxRectification of mistake u/s 254 - Depreciation on the non-compete fee denied - CIT(A) allowed the claim - ITAT rejected the claim - Whether AO has accepted the claim of the assessee - HELD THAT:- AO did not go into the question as to whether the noncompete fee can be treated as an ‘intangible asset’, whereby the appellant would be entitled to claim of depreciation under Section 32(1)(ii) of the Act, or not. The claim of the appellant of depreciation was in fact rejected by the Assessing Officer. Therefore, there was no occasion for the respondent to have challenged the said order. In appeal, the CIT(A) went ahead and directed the Assessing Officer to allow the claim of depreciation on the non-compete fee treating the same to be an ‘intangible asset’. It therefore, cannot be said that the issue of claim of depreciation on non-compete fee stood concluded before the Assessing Officer and/or the learned ITAT has exceeded its jurisdiction in considering the same. As decided in SHARP BUSINESS SYSTEM VERSUS COMMISSIONER OF INCOME-TAX - III [2012 (11) TMI 324 - DELHI HIGH COURT] 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 is 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; this question too is answered against the appellant and in favour of the Revenue.For the above reasons, this Court is of the opinion that the words “similar business or commercial rights” have to necessarily result in an intangible asset against the entire world which can be asserted as such to qualify for depreciation under Section 32(1)(ii) Merely because another appeal raising similar questions has been admitted by this Court, also does not persuade us to admit the present appeal as well only on this ground. - Decided in favour of revenue.
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