TMI Blog2019 (6) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... greement not only give enduring benefit, protected the assessee's business against competence, that too from a person who had closely worked with the assessee in the same business. The expression or any other business or commercial rights of similar nature used in Explanation 3 to sub-section 32(1)(ii) is wide enough to include the present situation. - decided in favour of assessee. Expenditure incurred for gaining controlling interest of a subsidiary company - Allowable business expenditure - HELD THAT:- This Court in the case of CIT v. Phil Corpn. Limited [ 2011 (6) TMI 912 - BOMBAY HIGH COURT] held that the Assessee was entitled to deduction of interest on overdraft under Section 36(1)(iii) of the Act when the investment was ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the depreciation as per Section 32 of the I.T. Act, 1961 ? (b) Whether on the facts and in the circumstances of the case and in law, the ITAT is right in deleting the disallowance of interest on the borrowed funds when the Assessee had not demonstrated whether the purpose for which advance were made is covered by the principle of commercial expediency and also the investment was made for acquiring the controlling interest in the associate concern ? (c) Whether on the facts and in the circumstances of the case and in law, the ITAT is right in deleting the disallowance of interest on the borrowed funds given to the sister concern and its directors when it is for the assessee to prove that each of the loan on which the assessee paid inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompete agreement and claimed depreciation on such asset. While dismissing the Revenue's Appeal against the Judgment of the Tribunal, following observations were made : We may recall the Assessing Officer does not dispute that the expenditure was capital in nature since by making such expenditure, the assessee had acquired certain enduring benefits. He was, however, of the opinion that to claim depreciation, the assessee must satisfy the requirement of Section 32(1)(ii) of the Act, in which Explanation 3 provides that for the purpose of the said sub-section the expression assets would mean ( as per clause (b) ) intangible assets, being known-how, patents, copyrights, trade marks, licenses, franchises or any other business or commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislature thus did not intend to provide for depreciation only in respect of the specified intangible assets but also to other categories of intangible assets which may not be possible to exhaustively enumerate. It was concluded that the assessee who had acquired commercial rights to sell products under the trade name and through the network created by the seller for sale in India were entitled to deprecation. In the present case, Mr.Patel was erstwhile partner of the assessee. The assessee had made payments to him to ward of competence and to protect its existing business. Mr.Patel, in turn, had agreed not to solicit contract or seek business from or to a person whose business relationship is with the assessee. Mr. Patel would not so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shares of subsidiary of the company to have control over the said company. Madras High Court in the case of Commissioner of Income Tax, Chennai v. Shriram Investments (Firm) Moogambika Complex, Chennai (229 Taxman 179 (Madras) has taken similar view. Similar opinion is expressed by Calcutta High Court in CIT v. Rajeeva Lochan Kanoria ((1994) 208 ITR 616 (1995) 80 Taxmann 572 (Cal.). Similar view was also expressed by Delhi High Court in case of Eicher Gooderarth Limited v. Commissioner of Income Tax (233 Taxmann 285 (Delhi). Under the circumstances, no question arises in this respect. 7. Question No. c pertains to the interest free advances made by the Assessee to the sister concern out of borrowed funds. In this case, the Tribunal b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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