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2022 (4) TMI 1263 - AT - Income TaxDepreciation on non compete fee - Depreciation on intangible asset as per Section 32(1)(ii) - HELD THAT:- To justify its claim of depreciation, in course of proceedings before the departmental authorities, assessee has submitted that since depreciation was allowed in preceding assessment years, the same cannot be disallowed in the impugned assessment year as Rule of Consistency would apply. However, we are unable to agree with the aforesaid submission made by the assessee before the departmental authorities. It appears, at the time of allowing depreciation in assessment years 2012-13 and 2013-14, the departmental authorities did not have the benefit of the ratio laid down by the Hon'ble jurisdictional High Court in case of Sharp Business System [2012 (11) TMI 324 - DELHI HIGH COURT] The reasoning of the Hon'ble jurisdictional High Court for coming to such conclusion is, unlike the rights mentioned in Section 32(1)(ii) which an owner can exercise against the world at large and can be traded or transferred, in case of non compete fee, the advantage is restricted only against the seller. Therefore, it is not a right in rem but in personem. We are conscious of the fact that some other non-jurisdictional High Courts have held that non compete fee is an intangible asset coming within the ambit of Section 32(1)(ii) of the Act and have allowed depreciation. However, since, we are bound by the decision of the Hon'ble jurisdictional High Court rendered in case of Sharp Business System Vs. CIT(supra), respectfully, following the ratio laid down in case of Sharp Business System (supra), we hold that assessee’s claim of depreciation on non compete fee is unacceptable. Accordingly, we uphold the decision of Commissioner (Appeals) by dismissing the grounds raised.
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