TMI Blog2019 (9) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... e particular party or individual and does not have the exclusivity over the rest of the world. Thus, non-compete fee cannot be termed as intangible asset. The Hon ble High Court has also set out the differences between the rights conferred by goodwill and rights acquired by the non compete agreement. Therefore, depreciation claimed on the said non compete fee cannot be allowed. The case laws cited by the Ld. AR will not support the case of the assessee has the jurisdictional High Court decision has given a clear finding relating to noncompete fee. Hence, Ground No. 2 of the revenue s appeal is allowed. - I.T.A. No. 2910/DEL/2017 - - - Dated:- 30-8-2019 - Ms Suchitra Kamble, Judicial Member And Shri Prashant Maharishi, Accounta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of non-compete fee of ₹ 15.5 crores, disallowance for claim of excess depreciation of ₹ 32,12,888/- and further made disallowance u/s 14A of the Act of ₹ 20,34,862/-. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT (A) dismissed the appeal of the assessee. 5. The Ld. DR submitted that as regards to Ground No. 1, the CIT (A) erred in deleting the disallowance made by the Assessing Officer under Section 14A of the Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules, 1962. As regards to Ground No. 2, the Ld. DR submitted that the CIT(A) should have not directed the Assessing Officer to allow on non compete fee treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound No. 1 of the appeal, there is clear finding of the Assessing Officer as well as the CIT(A) that there is no exempt income. Thus, there is no need to interfere with the findings of the CIT(A). Ground No. 1 is dismissed. As regards to Ground No. 2 of the Appeal, relating to disallowance on non-deduction of TDS on the payment of non-compete fee, the CIT (A) observed in the order that the assessee paid non compete fee of ₹ 15.50 crore as part of the sale consideration for acquiring the Wockhardt Group of Hospitals without deducting the tax within the meaning of Section 194L of the Act and accordingly provisions of Section 40(a)(ia) came into play. The said payment was capital in nature as declared by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance in rem . However, in the case of a non-competition agreement or covenant, the advantage is a restricted one, in point of time. It does not necessarily - and not in the facts of this case, confer any exclusive right to carry-on the primary business activity. The right can be asserted in the present instance only against L T and in a sense, the right in personam . Indeed, the 7 years period spelt-out by the non-competing covenant brings the advantage within the public policy embedded in Section 27 of the Contract Act, which enjoins a contract in restraint of trade would otherwise be void. Another way of looking at the issue is whether such rights can be treated or transferred - a proposition fully ..... X X X X Extracts X X X X X X X X Extracts X X X X
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