TaxTMI 
TaxTMI 
2012 (8) TMI 116
X X X X Extracts X X X X
X X X X Extracts X X X X
....siness. 3. The learned DR of the Revenue supported the assessment order and placed reliance on the following judicial pronouncements:- (i) R.G. Keswani v. Asstt. CIT [2009] 116 ITD 133 (Mum.) (ii) Srivatsan Surveyors (P) Ltd. v. ITO [2009] 32 SOT 268 (Chennai) (iii) CIT v. Hoogly Mills Co. Ltd. [2006] 157 Taxman 347 (SC) (iv) Bharatbhai J Vyas v. ITO [2006] 97 ITD 248 (Ahd). 4. As against this, the learned AR on behalf of the assessee supported the order of the learned CIT(A) in respect of Revenue's appeal and placed reliance on the following judicial pronouncements:- (i) Asstt. CIT v. Real Image Tech. (P) Ltd. [2009] 177 Taxman 80 (Chennai) (Mag) (ii) ITO v. Medicorp Technologies India Ltd. [2009] 30 SOT 506 (Chennai) (iii) 118 TTJ 334 (Mumbai) (sic) (iv) Skyline Coterers (P.) Ltd. v. ITO [2009] 116 ITD 348 (Mum.) 5. We have considered the rival submissions, perused the material on record and have gone through the orders of the authorities and the judgments cited by both the sides. We find that this issue has been decided by the learned CIT(A) as per para-9 of his order which is reproduced below:- "9. I have c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cumstances, it is held to be an expenditure on capital account incurred for the acquisition of the Non-compete Right, a capital asset. As regards the objection of the Assessing Officer at (a) above, it is apposite to extract the relevant provisions "Section-32. Depreciation. (1) In respect of depreciation of (i) Buildings, Machinery............. being tangible assets; (ii) Know-how, patents, copyrights, trade marks, licences, franchises, or any other business or commercial rights of similar nature being intangible assets acquired on or after the 1st day of April, 1998, owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed." The basic objection-of the Assessing Officer has been "that the business or commercial rights to qualify as an intangible assets has to be of 'similar' nature as know how, patents, copyrights, trade marks etc. and the Non-compete Right is not of the 'similar nature' as know how, patent etc. He has drawn this distinction by saying that the intangible assets like know how, patents etc. are capable of being owned and being transferred which characteristics ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., non-compete fee was paid for the acquisition of Non-Compete Rights from JISL for agreeing for not entering into or participate in any business which directly compete with the business of the assessee company. It shows that the facts are similar and therefore, this Tribunal decision cited by the learned DR of the Revenue is applicable in the present case but at the same time, we find that the subsequent decision of the Tribunal rendered in the case of Medicorp Technologies India Ltd. (supra) is also regarding the allowability of depreciation on Non-Compete Fees paid by the assessee of Rs. 2 crores and in that case, the issue was decided by the Tribunal in favour of the assessee. It is now settled position of law that when there are two views possible, the view favourable to the assessee should be followed as was held by the Hon'ble Apex Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192. Hence, we decide this issue in favour of the assessee by following the Tribunal decision rendered in the case of Medicorp Technologies India Ltd. (supra). Ground no. 1 raised by the Revenue is dismissed. 7. Ground no. 2 in the Revenue's appeal reads as under:- [2(a)]On the fac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1] 247 ITR 417/[1999] 105 Taxman 490. It was his alternative submission that in case, it is held that the expenditure is not allowable as revenue expenditure, depreciation should be allowed. The learned DR supported the order of the authorities below. 11. We have considered the rival submissions, perused the material on record and have gone through the orders of the authorities below and the judgment cited by the learned AR of the assessee. We find that a clear finding is given by the learned CIT(A) that the expenditure of Rs. 24,54,480/- incurred on account of due diligence and other compliance checks to Consultants and Lawyers is towards the acquisition of extrusion business and hence, it is of capital nature. Under these facts, the judgment of the Hon'ble Andhra Pradesh High Court cited by the learned AR of the assessee is not of help to the assessee. So far the alternative contention is concerned for allowing depreciation, we feel that depreciation is allowable when the asset in question is put to use. It is not on record as to whether newly acquired extrusion business had commenced the business in the present year or not and hence, for this purpose, we set aside the order of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eal reads as under: [4] The Id. CIT(A) erred in law and on facts in confirming the action of AO in computing deduction u/s 80HHC of the Act after setting off of unabsorbed depreciation of Rs. 21,35,96,830/- of earlier years against income computed under MAT provisions. Ld. CIT(A) ought to have quashed this action of AO and allowed deduction u/s 80HHC of the Act as claimed by the appellant. 17. It was submitted by the learned AR of the assessee that this issue is covered in favour of the assessee by the following judgments:- (i) CIT v. Packworth Udyog Ltd. [2011] 331 ITR 416/198 Taxman 10 (Ker.) (FB) (ii) Dy. CIT v. Syncome Formulations (I) Ltd. [2007] 106 ITD 193 (Mum)(SB) The learned DR supported the orders of the authorities below. 18. We have considered the rival submissions, perused the material on record and have gone through the orders of the authorities below and the judgments cited by the learned AR of the assessee. We find that this issue is now covered in favour of the assessee by the judgments cited by the learned AR of the assessee. By respectfully following the said decisions, this issue is decided in favour of the assessee. Ground no. 4 is allo....