TMI Blog2018 (3) TMI 1655X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the slump sale consideration. The AO has not disputed the bifurcation of slump sale consideration into different tangible and intangible assets, including the amount shown as non-compete fee. In the audited balance sheet, the assessee declared non-compete fee as intangible asset which was written off on pro-rata basis by way of amortization over a period of five years. However, in the computation of total income, the assessee added back the amortised amount of non-compete fee and claimed the full amount of ₹ 10.72 crore as a revenue expenditure. The Assessing Officer held that the non-compete fee cannot be allowed as a revenue expenditure u/s 37(1). He took into consideration the amendment by the Finance Act, 1998 providing for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Thus the action of the ld. CIT(A) in treating such amount as not deductible as revenue expenditure in the year of payment, has attained finality. As such, we are required to consider the eligibility of depreciation on amount of noncompete fee. 6. The ld. CIT(A) has treated this amount as covered under clause (ii) of section 32(1) as amended by the Finance (No.2) Act, 1998 w.e.f. 1.4.1999 providing for depreciation on `Intangible assets acquired on or after the 1st day of April, 1998, in the nature of : `know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature . In support of his decision, he has relied on the decision of the Hon ble Supreme Court in Techno Shares S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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, while deciding this issue against the assessee, has also considered the judgment of the Hon ble Supreme Court in Techno Shares Stocks Ltd. VS. CIT (supra), which was the foundation of the ld. CIT(A) s decision. 7. In view of the foregoing, we are of the considered view that the ld. CIT(A) was not justified in granting depreciation on the amount of noncompete fee. The impugned order is, therefore, overturned and the action of the AO is restored. 8. In the result ..... X X X X Extracts X X X X X X X X Extracts X X X X
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