Just a moment...

Report
FeedbackReport
Bars
×

By creating an account you can:

Logo TaxTMI
>
Feedback/Report an Error
Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
TMI Blog
Home / RSS

2020 (10) TMI 653

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....x u/s 115JB on book profit of Rs. 205,06,58,504/-. Since the assessee had entered into certain international transaction, the AO referred the matter to the TPO for determination of the ALP of the international transaction. However, the TPO did not draw any adverse inference in respect of such international transaction undertaken by the assessee. So far as the other issues are concerned, the AO, after considering the various replies given by the assessee, rejected the claim of deduction u/s 10AA of the Act made by the assessee in respect of income from six SEZ units and made addition of Rs. 226,98,41,758/-. Similarly, the AO made addition of Rs. 82,88,099/- on account of other income from four SEZ units. The AO further made addition of Rs. 8,40,46,029/- by rejecting the claim of depreciation on goodwill. Thus, the AO determined the total income of the assessee at Rs. 212,44,62,496/-. 4. In appeal, the ld.CIT(A) deleted the additions made by the AO. 5. Aggrieved with such order of the CIT(A), the Revenue is in appeal before the Tribunal. 6. Ground of appeal No.1 by the Revenue reads as under:- "1. Ld. Commissioner of Income Tax (Appeals) erred on law and on the facts of the ca....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....se two business units during the subject year under assessment. During the subject year under assessment, these two units were continuing business operations carried forward from the previous year, and there has been no splitting or reconstruction of these business units during the previous year under assessment.......... " "........Both, Coimbatore and Hyderabad SEZ units were initially set-up by Planet in the F. Y. 2010-11 and F.Y. 2011-12 respectively and commenced business operations in respective years of set-up. Assessee acquired business Operations from Planet on a going concern business in F.Y. 2012- 13, and has accordingly claimed deduction ids I0AA in respect of two units in its tax return for the subject year assessment. These two business units are engaged in export of services i.e. provision of IT (software development support) to Ebix group outside India, which is permitted business activity under SEZ and fur claim of tax holiday u/s 10AA of the Act. " 9. However, the AO was not satisfied with the arguments advanced by the assessee. He observed that the claim of the assessee that expenses of non-SEZ units of Chennai has been added back is incorrect. According to hi....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....chased one undertaking from M/s Planet Online Ltd. On being asked by the AO to submit assessment history of M/s Planet Online Ltd. for the last three years in respect of the allowability of deduction claimed by such purchase unit, the assessee failed to demonstrate as to how the new SEZ unit so acquired is not formed by splitting up or reconstruction of a business already in existence and the SEZ unit has not been formed by the transfer of previously used plant and machinery. He noted from the letter of transfer dated 29th October, 2012 that the Development Commissioner has also mentioned that tax liability may arise out of the changes that had to be fulfilled by the respective companies. He further noted that in the consolidated computation, the section 10AA exemption is Rs. 226,98,41,758/- whereas in the unitwise computation, the deduction u/s 10AA has been claimed at Rs. 227,02,14,376/-. Further, in the form No.3CD of audit report u/s 44AB of the Act for A.Y. 2013-14, the admissible deduction u/s 10AA has not been specified by the auditor and the difference in the claim has not been explained by the assessee. 13. The AO noted that in the consolidated computation, inadmissible e....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e expenses were incurred for the earning of revenue in 10AA claiming SEZ Units. Since, the Employees have earned revenue for SEZ Units, they have also utilized other resources of Non-SEZ Units in doing so. This will tantamount to use of resources of non-eligible already existing unit for earning revenue for SEZ units. Such arrangement according to the AO is colorable and are merely to avail benefits of deduction u/s 10AA. 17. The AO analysed the provisions of Section 10AA according to which the undertaking which is formed by splitting up or the reconstruction of business already in existence shall not be eligible for deduction under 10AA. He noted that there were expenses of Non-SEZ units which were used for earning income of SEZ units is admitted by the assessee itself in the form of Computation of Income submitted by it. Further, the assessee failed to submit satisfactory details and justification in respect of each unit that has claimed deduction u/s 10A. In view of the above, the AO rejected the claim of deduction u/s 10AA made by the assessee. 18. Before the CIT(A), the assessee made elaborate submissions on various issues which were considered by the CIT(A). The AO was also....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e Pvt. Ltd. However, as a result, certain specified assets were retained by the company, on which depreciation has been claimed in the instant year and, referred to as 'Noida DTA'. 3.4 That accordingly, during the assessment year 2012-13, company had three undertakings namely Noida SEZ, Nagpur SEZ and Chennai non-SEZ. It is stated that the company had claimed deduction under section 10AA of the Act for both the undertakings, namely Noida SEZ for an amount of Rs. 144,89,55,520/- and Nagpur SEZ for an amount of Rs. 6,23,98,396/- . Infact, in assessment year 2012-13, in respect of the assets retained by the company and classified under the head 'Noida DTA;, depreciation of Rs. 1,20,87,945/- was claimed by the company which was allowed as such in assessment framed under section 143(3) of the Act. The details of deduction claimed and, allowed for assessment year 2012-13 are as under:- Date of filing of return Income declared after claiming exemption u/s 10AA of the Act Income assessed after claiming exemption u/s 10AA of the Act Date of order u/s 143(3) of the Act 28.11.2012 NIL (pages 230 235 of Paper Book and 272- 328 of Paper Book)) NIL 29.1.2016 (pages 224 - 229 of....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.....2016 (224-229) II Nagpur SEZ AY Deduction claimed (in Rs.) (page of PB) Entity in which, deduction claimed Disallowance if any Date of order u/s 143(3) of the Act (Pages of PB) 2011-12 31,23,74,139 (462,465-466) Ebix SEZ Nil 17.2.2015 (481-483) 2012-13 6,29,98,996 (232) Appellant company Nil 29,1.2016 (224-229) III Coimbatore SEZ AY Deduction claimed (Rs.) Entity in which, deduction claimed Disallowance, if any 2011-12 61,644 (532-533) Planet Online (P) Ltd. Nil 2012-13 49,62,722 (586,588) Planet Online (P) Ltd. Nil IV Uppal SEZ AY Deduction claimed (Rs.) Entity in which, deduction claimed Disallowance, if any 2012-13 84,24,989 (586-587) Planet Online (P) Ltd. Nil 19. It was reiterated that the disallowance was made by the AO based on fundamental misconception of facts and circumstances. It was argued that the assessee has maintained complete books of account which were duly audited and have been accepted. In other words, the AO has not rejected the books of account by invoking the provisions of section 145(3) of the Act and the profit declared has been accepted. It was submitted that when the AO has accepted separate books of account main....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....transfer all the eligible unit to another unit in a scheme of amalgamation or demerger. Relying on various decisions, it was argued that acquisition of an undertaking on slump sale could neither in law nor on the facts be made a basis to deny the legitimate claim of deduction. It was argued that the change in ownership either by way of slump sale, merger or otherwise cannot be made the basis to disallow the claim of deduction. It was argued that fulfillment of the conditions as provided in sub-section (1) r.w. section 4 of section 10AA of the Act has to be seen in the year of formation and since in the year of formation of the SEZ units, units were eligible for the deduction, it cannot be said that such units are not eligible for deduction u/s 10AA. Relying on the decision of the Hon'ble Supreme Court in the case of Bajaj Tempo Ltd. vs. CIT, 196 ITR 188, it was argued that the conditions as prescribed in section 10AA(1) of the Act r.w. sub-section (4) have to be seen in the year of formation of the unit and not subsequently. The following details were furnished before the CIT(A) regarding the assessment particulars and it was argued that the table given by the AO at page 2, para 1 ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....50 24. It was argued that while computing the aggregate income, the assessee reduced the entire claim of depreciation both in respect of non-SEZ units and SEZ units and computed the income at Rs. 226,98,41,758/- and as such, restricted its claim of deduction to Rs. 226,98,41,758/- as against eligible claim of Rs. 227,02,14,376/- pertaining to all the four units. In other words, the entire expenditure has been reduced while computing the income of the appellant company and no deduction has been claimed in excess to the gross income declared by the company. It was stated that the de-merger of the undertaking had taken place in assessment year 2012-13 and the appellant had claimed depreciation on Noida DTA of Rs. 1,20,87,945/- which has been allowed as such and likewise deduction was claimed of Rs. 144,89,55,220/- under section 10AA of the Act in respect of Noida SEZ and same stood allowed under section 143(3) of the Act. Thus, even otherwise, having accepted the demerger of the BPO unit and having allowed depreciation in the preceding assessment year and deduction under section 10AA of the Act, there was no justification on the part of the Assessing Officer to make any departure an....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ooks of account are accepted as such, no disallowance can be validly made. According to him, the disallowance is contrary to the principle of consistency and deduction granted in initial year cannot be withdrawn. According to him, mere amalgamation of the undertaking could neither in law nor on facts be made a basis to deny legitimate claim of deduction of the assessee company and does not amount to splitting up or reconstruction of business already in existence. Likewise, mere acquisition of undertaking on slump sale could neither in law nor on facts be made a basis to deny legitimate claim of deduction of the assessee company. According to him, mere change in ownership either by way of slump sale, merger or otherwise cannot be made a basis to disallow the claim of deduction and also assume that there is splitting up and reconstruction of business. According to the ld.CIT(A), fulfillment of the conditions as provided in sub-section (1) r.w. subsection (4) of section 10AA has to be seen in the year of formation and since in the year of formation of the SEZ units, units were eligible units, it cannot be said that such units are not eligible units for deduction u/s 10AA in the instan....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....o deduction under the said provision. On the contrary, the ground raised by the Revenue is restricted to deletion of addition on account of business income from six units. He submitted that the income from six units has been assessed by the AO as business income which is evident from the computation portion of the assessment order. Therefore, the ground raised that the CIT(A) has erred in deleting the addition on account of business income of six unit is fundamentally misconceived and misplaced. Since the Revenue has not challenged the deletion on account of deduction u/s 10AA, therefore, the argument of the ld.CIT, DR to extend the scope of appeal to claim of deduction u/s 10AA is not tenable being not in accordance with the law. 30. Without prejudice to the above, he submitted that even independently examining the claim, the ld. CIT, DR has not in any manner, factually and legally rebutted the findings given by the ld.CIT(A) while allowing the claim of deduction u/s 10AA of the Act. He submitted that the argument of the ld.CIT, DR that the deduction u/s 10AA was claimed for the first time in A.Y. 2013-14 and, therefore, the AO was justified in denying the claim of deduction in t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... books of account for eligible units, the AO shall compute deduction on reasonable basis. 33. The ld. Counsel for the assessee, referring to the following decisions, submitted that the disallowance is contrary to the principle of consistency since the eligible undertaking of Noida and Nagpur stood amalgamated with the assessee company during A.Y. 2012-13 and the deduction claimed thereon stood allowed as such and, therefore, there was no justification for the AO to have held that such undertakings were not eligible undertakings for the A.Y. 2013-14:- i) CIT vs. Excel Industries Ltd., 358 ITR 295 (SC); ii) CIT vs. J.K. Charitable Trust, 308 ITR 161 (SC); and iii)Moolchand Khairati Ram Trust vs. DIT(E), 377 ITR 650 (Del). 34. The ld. Counsel for the assessee submitted that all the four undertakings, i.e., Noida SEZ, Nagpur SEZ, Coimbatore SEZ and Uppal SEZ were eligible undertakings wherein deduction claimed stood duly allowed and, therefore, once the deduction was granted in the initial year, the same cannot be withdrawn. For the above proposition, he relied on the following decisions:- i) 355 ITR 14 (Del) CIT v Delhi Press Patra Prakashan Ltd. ii) 251 CTR 290 (Del) CIT ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... 106 TTJ 484 (Chennai) Kumaran Systems (P) Ltd. ACIT ii) ITA Nos 623 & 847/B/2010 dated 19.5.2010 DCIT v. M/s L.G. Soft India (P) Ltd. iii) 100 ITD 125 Tech Book Electronic Services (P) Ltd v ACIT iv) 82 TTJ 174 ACIT v IIS Infotech Ltd v) IT (TP) A No. 1444 (Bang) 2012 GXS India Technology Centre (P) Ltd vs. ITO 38. The ld. Counsel for the assessee, referring to the provisions of section 10AA of the Act submitted that fulfillment of the conditions as provided in sub-section (1) r.w. sub-section (4) of section 10AA of the Act has to be seen in the year of formation and since in the year of formation of the SEZ units, units were eligible units, it cannot be said that such units are not eligible units for deduction u/s 10AA of the Act in the instant year. For the above proposition, the ld. Counsel relied on the following decisions:- i) 181 ITR 518 (Kar.) CIT vs. Nippon Electronics (India) Pvt. Ltd. ii) 59 ITD 563 (Pune) Vintage Cards and Creations vs. ACIT iii) 108 TTJ 905 (Pune) Ghodavat Pan Masala India (P) Ltd. Vs. JCIT iv) 14 SOT 303 (Mum) ITO vs. Laxmi Packers 39. The ld. Counsel for the assessee submitted that as per the provisions of section 10AA, the emphasis....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e was only having business undertaking at Noida and it is also only after composite scheme of arrangement and business transfer agreement during the assessment year the assessee owned six undertakings/units is concerned, the ld. Counsel submitted that the same has incorrectly been noted by the AO that in F.Y. 2012-13 there was major change in the undertaking owned by the assessee company. He submitted that the AO has factually erred in holding that the units of Noida and Nagpur came to be owned by the assessee company in the instant year whereas the same was acquired by the assessee during A.Y. 2012-13 and, therefore, the period under consideration is second year of claiming exemption u/s 10AA of the Act by the assessee. 42. Referring to page 3, para 3 of the assessment order, he submitted that the AO himself has admitted that the scheme of amalgamation of Ebix Software India Pvt. Ltd. with the assessee company is w.e.f. 01.04.2011 and, therefore, units of both Noida and Nagpur hereon owned by the amalgamating company, namely, M/s Ebix Software India Pvt. Ltd. now stood owned by the assessee company as an amalgamated company from A.Y. 2012-13. He submitted that the deduction claim....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....that there is variation in the profits of SEZ undertaking whereas on the contrary, there are losses in the non-SEZ undertakings is concerned, the ld. Counsel for the assessee submitted that mere fact that there are variation in the profits of SEZ undertaking and there are losses in non-SEZ units cannot be a ground to draw any adverse inference against claim made by the assessee company. He submitted that when the assessee company maintains separate books of account for each of the undertakings i.e., eligible undertakings or non-eligible undertakings owned by the assessee company and the audit report in the prescribed form u/s 10AA had been placed on record in the instant assessment proceedings, and no defects were found or pointed out in respect of books of account or the P & L Account of either the eligible undertakings or non-eligible undertakings, any adverse observation on account of variation of profits or losses is absolutely misconceived and thereby the claim of deduction u/s 10AA cannot be denied. Referring to the decision of the Hon'ble Delhi High Court in the case of PCIT vs. Cincom Systems India (P) Ltd., 103 taxmann.com 161 (Delhi), the ld. Counsel submitted that the Ho....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....bservation of the AO with respect to differential figures of inadmissible expenses of non-SEZ units in consolidated computation of income and individual computation of income is incorrect. 47. So far as the observation of the AO that resources of non-SEZ units have been used for earning of revenue in SEZ units is concerned, he submitted that this is also factually incorrect. So far as the observation of the AO that expenses of Noida DTA have been clubbed with the expenses of Noida SEZ is concerned, he submitted that the same is also incorrect since no expenditure has been incurred and claim in respect of the registered office of the assessee company except depreciation of Rs. 52,74,157/-. He submitted that unsubstantiated observation does not meet the rule of law and, therefore, cannot be relied upon to draw any adverse inference against the assessee. Referring to the decision of the Hon'ble Supreme Court in the case of Bajaj Tempo Ltd. vs. CIT, reported in 196 ITR 188(SC), he submitted that the claim of deduction should be examined only in the year of formulation and not subsequently. 48. So far as the allegation of the AO that units have been acquired on slump sale basis is con....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Financial Costs 80 - 80 Deprecation and amortization expenses 14,15,441 3,50,65,473 3,64,80,914 Other expenses 1,14,28,266 3,35,66,482 4,49,94,748 Foreign Exchange gain and loss - - - Total Expenses (IV) 3,16,90,329 21,86,67,175 25,03,57,504 V Profit before exceptional and extraordinary items (V) = (III-IV) (3,16,90,329) (19,58,92,586) (22,75,82,915) VI Add Back:       Depreciation and Amortization expenses 14,15,441 3,50,65,473 3,64.80,914 Other expenses/employee 3,01,30,343 21,85,82,287 24,87,12,630 Total Add Back (VI) 3,15,45,784 25,36,47,760 28,51,93,544 VII Net profit/(Loss) (VII) = (V-VI) (144,545) 5,77,55,174 5,76,10,629 VIII Less: Deprecation as per Income Tax Act 9,01,810 4,73,47,487 4,82,49.297 IX Income (10,46,355) 1,04,07,687 93,61,332 X Add back: Late Payment   4,04,654   XI Income assessable   97,65,986   50. Therefore, the observation of the AO has no valid justification and in any case cannot be a ground to deny claim of deduction u/s 10AA. Relying on the following decisions, the ld. Counsel for the assessee submitted that mere suspicion, surmises and conjectures ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....income of SEZ units; x) The ratio of employee expenses to revenue under each of the unit show that the deduction claimed by the assessee company in respect of eligible units is not in accordance with the law. 53. We find, the ld.CIT(A) allowed the claim of the assessee on the ground that the various observations so made by the AO are factually incorrect or not in accordance with the law. While holding so, he further held that once separate books of account are accepted as such, no disallowance can be validly made. Further, deduction granted in the initial year cannot be withdrawn and the disallowance is contrary to the principles of consistency. According to the ld.CIT(A), mere amalgamation of the undertaking could neither in law and nor on fact be made a basis to deny legitimate claim of deduction of the assessee company and does not amount to splitting up or reconstruction of business already in existence. Likewise, mere acquisition of undertaking on slump sale could neither in law and nor on fact be made a basis to deny legitimate claim of deduction of the assessee company. He further held that mere change in ownership either by way of slump sale, merger or otherwise cannot ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....et Online (P) Ltd. (364-398) 49,62,722 (398) Nil IV Uppal S EZ AY Entity in which, deduction claimed Deduction claimed (Rs.) Disallowance, if any 2012-13 Planet Online (P). Ltd. (364-398) 84,24,989 (397) Nil 56. From the above, we find that in each of the undertakings, deduction as claimed by the assessee has been allowed by the Revenue both in the preceding year and succeeding assessment years. Neither the AO nor the CIT, DR, has at all in any manner rebutted the aforesaid factual position and, therefore, following the rule of consistency itself, we are of the view that the claim of the assessee is maintainable and cannot be denied. 57. We find, the Hon'ble Supreme Court in the case of CIT vs. M/s Excel Industries, 358 ITR 295 has observed as under:- "29. In Radhasoami Satsang Saomi Bagh v. Commissioner of Income Tax, [1992] 193 ITR 321 (SC) this Court did not think it appropriate to allow the reconsideration of an issue for a subsequent assessment year if the same "fundamental aspect" permeates in different assessment years. In arriving at this conclusion, this Court referred to an interesting passage from Hoystead v. Commissioner of Taxation, 1926 AC 155 (PC) whe....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....t the matter rest rather than spend the tax payers' money in pursuing litigation for the sake of it." 58. We further find that Noida SEZ unit was set up in assessment year 2010-11 and, therefore, in the instant year, this is fourth year of deduction. Similarly, Nagpur SEZ was set up in A.Y. 2011-12 and this is third year of deduction. We find, the Coimbatore SEZ was set up in A.Y. 2011-12 and is the third year of deduction. Finally, Uppal SEZ was set up in A.Y. 2012-13 and is the second year of deduction. It is the settled proposition of law that eligibility of claim of deduction u/s 10AA has to be examined in the year of setting up of the unit and once the deduction has been allowed in the year of formation of the unit, then, the AO is not entitled to re-examine the eligibility of claim of deduction in the succeeding year. 59. We find, the Hon'ble Delhi High Court in the case of CIT vs. Delhi Press Samachar Patra (P) Ltd, 355 ITR 14 has observed as under: "74. In the present case, the claim of the assessee under section 80-I of the Act was examined and allowed by the Assessing officer for three years preceding the assessment year 1991-1992. It is relevant to note that asse....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... on the ground of ineligibility since the set of facts which enable an assessee to claim to be eligible for deduction under section 80-I of the Act occur in the previous year relevant to the initial assessment year and have to be examined in the initial assessment year. In such cases, where the facts on the basis of which the deductions are claimed are subject matter of an earlier assessment year and do not arise in the current assessment year, it would not be possible for an Assessing Officer to take a different view in the current assessment year without altering or reopening the assessment proceedings in which the eligibility to claim the deduction has been established. 76. In cases where deduction is granted under Section 80-I of the Act, the applicability of the Section is determined in the year in which the new industrial undertaking is established. The qualification as to whether any industrial undertaking fulfills the condition as specified under Section 80-I of the Act has to be determined in the year in which the new industrial undertaking is established. Although the deduction under Section 80-I of the Act is available for the assessment years succeeding the initial as....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....assessee under Section-10A is for the period of 10 consecutive assessment years beginning with the assessment year in which the undertaking begins to export computer software. Besides the above, he submitted that both Commissioner of Income Tax (Appeals) and the Tribunal have concluded on examination of evidence that SEEPZ unit was an independent unit not formed by splitting up of the Fort unit. Therefore, this Court should not interfere with this finding of fact. 6. We have considered the submissions. We find that the submissions made by Mr. Pardiwalla on the basis of the decision of this Court in the matter of Paul Brothers (supra) and Director of Information Pvt. Ltd. (supra) merits acceptance. Therefore, in this case, it is not necessary for us to decide whether SEEPZ unit was set up/formed by splitting up of the first unit. In both the above decisions, this Court has held that where a benefit of deduction is available for a particular number of years on satisfaction of certain conditions under the provisions of the Income Tax Act, then unless relief granted for the first assessment year in which the claim was made and accepted is withdrawn or set aside, the Income Tax office....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....t formed by the splitting up, or the reconstruction, of a business already in existence: (iii) it is not formed by the transfer to a new business, of machinery or plant previously used for any purpose. 30. The AO referred to the amalgamation of M/S. Last Peak BPO Pvt. Ltd., with the Assessee during the previous year. M/S. Last Peak BPO Pvt. Ltd., was in all respects an STP unit and was similarly placed as that of the Assessee in terms of approval and being eligible for deduction u/s.10A of the Act, etc. The amalgamation was effective 23.4.2008. The Assessee had a license dated 17.6.2005 from the Asst. Commissioner of Customs 100% EOU/STP for private bonded warehouse cum manufacturing in its name. Pursuant to the amalgamation of the M/S. Last Peak BPO Pvt. Ltd., the Assessee applied for recognizing M/S. Last Peak BPO Pvt. Ltd., also as covered by the erstwhile license for private bonded warehousing cum manufacturing. The endorsement was done by the Asst. Commissioner of Customs on 11.2.2010. According to the AO there was no approval of M/S. Last Peak BPO Pvt. Ltd. as 100% EOU upto 11.2.2010 and therefore deduction u/s. 10AA of the Act could not be granted. Further the AO also ex....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ditor's report that SECL being the sole owner of its branch office entered into a business transfer agreement with the assessee company on 5.9.05 for transfer of business of the branch office by way of slump sale as a going concern together with all its rights, properties and assets of the business. It was also stated that deduction u/s. 10A had been claimed by the branch office for the A.Ys. 1999-2000 to 2006-07 (upto Nov. 2005) and after its transfer, the STPI had given its no objection for the transfer of the unit from the branch office to the assessee company w.e.f. 1.12.2005. In view of the slump sale, the STPI unit now transferred to the assessee is claimed to be eligible for benefit of deduction u/s. 10A of the Act. 6. The AO asked the assessee to explain specific provisions in section 10A of the Act under which it was eligible for deduction in respect of an undertaking stated to be purchased on a slump sale basis. ......... ............................................................................................. ............................................................................................. 14. We have considered the submissions of both the parties and....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ound for the AO to hold that the assessee was not entitled for deduction u/s. 10A of the Act within the meaning of section 10A(2) of the Act. Thus, in view of the above and respectfully following the aforesaid referred to earlier order of the coordinate Bench, we set aside the impugned order passed by the ld. CIT(A) and direct the AO to allow the claim of the assessee for deduction u/s. 10A of the Act. 16. For the aforesaid view, we are also fortified by the decision of this Bench of the Tribunal in the case of ITO v. M/s. GXS Technology Centre (Pvt.) Ltd. in ITA No.616/Bang/2009 for the A.Y. 2004-05, order dated 10.08.2010 reported in wherein the relevant finding is given in para 4 & 5 which read as under:- "4. The learned departmental representative strongly supported the order of the AO while the learned counsel for assessee supported the order of the CIT(A) and also placed reliance upon the decision of the 'B' Bench of this Tribunal in the case of Dy.CIT v. M/s. L.G. Soft India Pvt. Ltd. in ITA Nos.623 & 847/Bang/2010 dated 19-5-2010 wherein it has been held that where an undertaking existed in the same place, form and substance and did carry on the same business before a....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....neur" as per section 2(j) of Special Economic Zones Act, 2005, i.e., such persons should have been granted a letter of approval by the Development Commissioner u/s 15(9) of Special Economic Zone Act, 2005; b) the "unit" should be a unit as defined in clause (zc) of section 2 of Special Economic Zone Act, 2005; c) The "unit" should begin to manufacture or produce articles or things or provide any service during the F.Y. relevant to A.Y. commencing on or after 01.04.2006; and d) The "unit" should export things or service by any mode, physical or otherwise. However, the aforesaid deduction is subject to condition provided in subsection (4) of section 10AA. 65. In view of the above, it is evident that any eligible unit seeking to claim deduction u/s 10AA(1) of the Act should necessarily fulfill the conditions as specified in sub-section (4) of section 10AA which reads as under:- "(4) This section applies to any undertaking, being the Unit, which fulfils all the following conditions, namely:- (i) it has begun or begins to manufacture or produce articles or things or provide services during the previous year relevant to the assessment year commencing on or after the 1st day o....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....refore, even if the undertaking is established by transfer of building, plant or machinery, but it is not formed as a result of such transfer, the assessee could not be denied the benefit. 67. Similarly, the Hon'ble Apex Court in the case of CIT v. Yokogawa India Ltd. (supra) has observed as under:- "17. If the specific provisions of the Act provide [first proviso to Sections 10A(1); 10A (IA) and 10A (4)] that the unit that is contemplated for grant of benefit of deduction is the eligible undertaking and that is also how the contemporaneous Circular of the department (No.794 dated 09.08.2000) understood the situation, it is only logical and natural that the stage of deduction of the profits and gains of the business of an eligible undertaking has to be made independently and, therefore, immediately after the stage of determination of its profits and gains. At that stage the aggregate of the incomes under other heads and the provisions for set off and carry forward contained in Sections 70, 72 and 74 of the Act would be premature for application. The deductions under Section 10A therefore would be prior to the commencement of the exercise to be undertaken under Chapter VI of the ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....cified in the scheme as "the transfer date". It cannot be otherwise. It must be remembered that before applying to the Court under Section 391(1), a scheme has to be framed and such scheme has to contain a date of amalgamation/transfer. The proceedings before the court may take some time; indeed, they are bound to take some time because several steps provided by Sections 391 to 394-A and the relevant Rules have to be followed and complied with. During the period the proceedings are pending before the Court, both the amalgamating units, i.e., the Transferor Company and the Transferee Company may carry on business, as has happened in this case but normally provision is made for this aspect also in the scheme of amalgamation. In the scheme before us, clause 6(b) does expressly provide that with affect from the transfer date, the Transferor Company (Subsidiary Company) shall be deemed to have carried on the business for and on behalf of the Transferee Company (Holding Company) with all attendant consequences. It is equally relevant to notice that the Courts have not only sanctioned the scheme in this case but have also not specified any other date as the date of transfer amalgamation. ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ved as under:- "......The High Court was in error in holding that even after amalgamation of two companies, the transferor company did not become non-existent instead it continued its entity in a blended form with the appellant company. The High Court's view that on amalgamation 'there is no complete destruction of corporate personality of the transferor company instead there is a blending of the corporate personality of one with another corporate body and it continues as such with the other is not sustainable in law. The true effect and character of the amalgamation largely depends on the terms of the scheme of merger. But there cannot be any doubt that when two compa- nies amalgamate and merge into one the transferor company loses its entity as it ceases to have its business. However, their respective rights of liabilities are determined under scheme of amalgamation but the corporate entity of the transferor company ceases to exist with effect from the date the amalgamation is made effective." 72. Thus, since, admittedly and undisputably, the effective date of the scheme was 01.04.2011 under the scheme of amalgamation of Noida SEZ unit and Nagpur SEZ units which amalga....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....on the ground that the STPI unit is found by splitting of the existing unit. In appeal, on appreciation of the material on record, the said order was set aside and the benefit under section 10A was extended to the STPI unit and the Revenue preferred an appeal before the Tribunal which has confirmed the same. 4. This court had an occasion to consider the similar question in the case of CIT v. Wipro GE Medical System Ltd. reported in [2015] 4 ITR-OL 288 (Karn) : [2014] 226 Taxman 156 (Karn), and in the case of CIT v. Maxim India Integrated Circuit Design (P.) Ltd. reported in [2011] 202 Taxman 365 (Karn) and CIT Vs. Expert Outsource (P) Ltd., [2013] 358 ITR 518 [2012] 20 taxmann.com 481 (Kar.). 5. The law laid down in the aforesaid cases squarely applies to the facts of this case. Therefore, the findings recorded by both the appellate authorities are in accordance with law. Thus, the substantial question of law raised in these appeals is answered in favour of the assessee and against the Revenue and the appeals are dismissed. 75. Similarly, the Delhi Bench of the Tribunal in the case of Addl. CIT vs. Delhi Press Samachar Patra (P) Ltd., 103 TTJ 578, has held as under:- "5. We ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....y the assessee under Section 80-IA of the Act on the book results of unit 4. As such, considering all the facts and circumstances of the case, we are of the view that the relief allowed by the learned CIT(A) on this issue to the assessee was fully justified and there being no infirmity in the impugned orders of the learned CIT(A) allowing such relief, we uphold the same." 76. We find, the assessee, in its reply dated 21.11.2016 addressed to the AO has stated as under:- 77. Similarly the assessee in its reply dated 21st November, 2016 has stated as under:- 77. The above submissions before the AO by the assessee has neither been challenged nor rebutted before us and, therefore, we are of the considered opinion that the observations of the AO cannot be made a basis to restrict the claim of deduction under section 10AA of the Act. So far as the contention of the ld. DR that the CIT(A) has erred in para 3.20 of his order to state that the figures of Rs. 19,14,995/- and Rs. 3 lakhs represents expenses incurred on guest house and, therefore, were added back has never come before AO, and, on the contrary, in the unit-wise computation of income it is mentioned that these are in the natur....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....iture claimed from the deduction under section 10AA of the Act and nothing more but the same could not be a reason for the AO to deny the claim of deduction under section 10AA. Therefore, to suggest that there is fictitious arrangement and the entire resources of Chennai unit or Hyderabad unit have been utilised for earning tax free income of SEZ unit is not justified. Suspicion, surmises and conjectures however strong may be cannot be a basis for disallowing a claim of detection. In view of the above discussion, we do not find any infirmity in the order of the CIT(A) in deleting the disallowance of deduction claimed under section 10AA. Accordingly the ground raised by the revenue is dismissed. 79. Ground of appeal No. 2 by the Revenue reads as under:- "2. Ld. Commissioner of Income Tax (Appeals) erred on law and on the facts of the case in deleting the addition of Rs. 82,88,099/- made by the AO on account of other income from 4 SEZ units." 80. Facts of the case, in brief, are that the AO during the course of assessment proceedings observed from the reply dated 20th December 2016 as per annexure-A that the assessee has included 'other income' of Rs. 82,88,099/- in the computati....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....eny the claim of deduction in the instant the year and, as such, is contrary to principles of natural justice which has been upheld by the Hon'ble apex court in the case of CIT vs. Excel industries Ltd., 358 ITR 295. Referring to the decision of the Hon'ble Karnataka High Court in the case of ACIT vs Motorola India Electronics (P) Ltd., 265 CTR 94. He submitted that the Hon'ble High Court has upheld the decision of the Tribunal wherein the Tribunal has held that the interest received and the consideration received by sale of import entitlements has to be construed as income of the business of the undertaking. It was held that there is direct nexus between this income and the income of the business undertaking. Referring to the following decisions, he submitted that in all these decisions it has been held that interest income on account of the deposits made from funds received from business are incidental to the business:- i) CIT vs. Paramount Premises (P) Ltd.; ii) CIT vs. Hindustan Gem & Chemicals Ltd., 72 taxmann.com 90 (Cal); iii)CIT vs. Chinna Nachimuthu Constructions,297 ITR 70 (Kar); iv) Satishchandra & Co. vs. CIT, 234 ITR 70 (Kar): and v) M/s Green Agro Pack P. L....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....has been held to be eligible for deduction under section 10AA of the Act in assessment year 2012-13, there remains no justification for the AO to deny the claim of deduction in the impugned assessment year. We find Hon'ble Karnataka High Court in the case CIT vs Motorola India Electronics Private Limited, 265 CTR 94 while deciding an identical issue has observed as under:- "In s. 801A, the term "profits and gains from the business has been used. Similar terminology has been used m many other sections such as s. 80JJ or 80JJA, etc., whereas under s- 801 and other sections the terminology used is "profits and gains derived from industrial undertaking". The term "from the business of' is much wider than the term "derived from industrial undertaking.' Keeping this distinction in mind, we have to necessarily hold that the entire profits derived from the business of undertaking should be taken into consideration, while computing the eligible deduction under s.10B/10A of the Act, by applying the mandatory formula." "The issue becomes further clear when we look into the provisions of s. 80HHC which are similar, as far as the education (sic) of deduction is concerned. As the legislatu....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....to substituted section 10A and similar provisions. The use of the words "profits of the business of the undertaking" in section 10AA(7) is very broad. This due to the fact that the two over lapping terms "business" and "business of the undertaking" forming part of the above expression are very broad in themselves. The term 'business' has been understood in a very broad sense by the Supreme Court in Continental Construction Ltd v. C1T, reported in 195 ITR 81 (SC) so as to include all activities, obligations and commitments which are incidental or ancillary to the operating part of the business. In the context of section 80HHB, the Supreme Court observed: "The expressions "business of execution of a foreign project" or work forming part of it or the 'profits derived' from the business, take in all aspects of a business involving the activities referred to in Sub-section (2) (b) of Section 80-HHB together with all activities, commitments and obligations ancillary and incidental thereto and the profits flowing therefrom." The act of securing a letter of credit facility for imports with fixed deposits will be an activity incidental and connected with export busin....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....relied on by the ld. CIT(A). In view of the above discussion and in view of the detailed reasoning given by the CIT(A), while allowing the claim of the assessee for deduction under section 10AA & interest income and other income, we do not find any infirmity in the same. Accordingly, the same is upheld and the ground raised by the revenue is dismissed. 95. Ground of appeal No. 3 by the Revenue reads as under:- "3. Ld. Commissioner of Income Tax (Appeals) erred on law and on the facts of the case in deleting the addition of Rs. 8,40,46,029/- made by the AO on account of Depreciation claimed on goodwill." 96. Facts of the case, in brief, are that the AO, during the course of assessment proceedings observed that the assessee company has purchased the business of M/s Planet Online Pvt. Ltd., through business transfer agreement dated 01.06.2012 and created goodwill of Rs. 33,61,84,116/- in financial year 2012-13 and claimed depreciation there on of Rs. 8,40,46,029/-. He observed that para 14 of the notes to accounts read as under:- "The Company acquired business of Planet Soft India Pvt. Limited for a consideration of Rs. 385 Millions (USD 7 Million). TRC Corporate Consulting Pvt.....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....olution for insurance companies to do their new business software developed using Java/J2EE language and database which the assessee company was already engaged in. Further, the assessee company has not purchased any trade mark or new business technologies which could have made any additional value in the hands of the assessee company. Further, the assessee was having set chain of the supply of insurance for specified software for the insurance industry which the assessee has purchased from Planet Online Private Limited. Therefore, he held that the depreciation on goodwill is actually construed as depreciation of non-compete fee in the light of the given facts and circumstances of the case. Therefore, relying on various decisions the AO disallowed the claim of depreciation of Rs. 8,40,46,029/-. 100. Before the CIT(A) it was submitted that the addition was made by the AO based on fundamental misconception of facts and law. The finding of the AO that excess of purchase money over tangible assets of the business is in fact the payment of non- compete fee as there was no goodwill with the seller and the creation of goodwill in the books is misleading was factually incorrect and based....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....itted that judicially, it has been consistently recognized and held that any sum paid over and above the book value is to be held as exclusive until there is an agreement to the contrary and thus, in absence of any agreement to the contrary, in any manner, holding that the sum is paid towards non compete fees, is absolutely contrary to the actual facts. The Assessing Officer has referred to the judgment of the Hon'ble Delhi High Court in the case of Sharp Business System v. CIT reported in 254 CTR 233. This judgment has no application to the facts of the case of the appellant. In the said case, expenditure of Rs. 3 crores has been incurred towards non compete fee and the same was claimed as revenue expenditure which on the facts of the case was held to be capital expenditure. However, no such expenditure has been claimed by the appellant company, in any case, a close reading of the judgment would show that in the said case, non compete fee has been paid for a period of seven years which was held to be enduring benefit and therefore, such expenditure has been held to be capital expenditure. It is submitted that in the said case, the appellant thereafter, made an alternative conten....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....he length of time for which the non-compete agreement would operate although that is not decisive. While the length of time for which computation is eliminated may not strictly be decisive in all cases, yet, at the same time, it should not be so brief as to virtually be transitory. The Court finally held that, "the assessee did not acquire any capital asset by making the payment of non-compete fee of 4 crores. It merely eliminated completion in the two wheeler business, for a definite period of time." Therefore, the expenditure was held to be revenue in nature. 5.3 In view thereof, claim of non-compete fee without payment of any consideration is though a part and parcel of the agreement and provided on account of commercial expediency and business necessity, yet the same cannot be made a basis to hold that excess of consideration paid over, the book value assets is not goodwill, but payment for non compete fee as claimed by the Assessing Officer. The judgment relied by the Assessing Officer to deny the eligible deduction of depreciation on the goodwill has been given in the different context and has no connection with the facts of the given case In view of the above, the Assess....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....n report provides for the valuation of the business acquired by the assessee company on a going concern basis at a higher sum than the peak value it ought to have been held as the goodwill of the business. He submitted that even the method of valuation as adopted in valuation report is discounted cash flow method of the revenue for the succeeding years which itself established submission of the assessee that the amount has been paid for the goodwill of the assessee and not for a non-compete fee. He submitted that the non- compete fee clause is for a period of two years i.e., for the period from 01.06.2012 i.e., the transfer date to 31.05.2014 whereas revenue as per valuation report is for financial year 2012-13 to financial year March, 2017. This, according to the ld. counsel shows that the money paid and determined as consideration based on the valuation report and accepted in the agreement with M/s Planet Online Private Ltd. are in respect of goodwill and not in respect of non-compete fee. He submitted that non-compete fee was an incidental obligation of M/s Planet Online Pvt. Ltd. and there was no separate consideration paid towards noncompete fees. He submitted that as per vari....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d provided on account of commercial expediency and business necessity, yet, the same cannot be made a basis to hold that excess of consideration paid over the book value of assets is not goodwill, but payment for non-compete fees as held by the AO. He accordingly submitted that the action of the AO in denying depreciation on goodwill is based on fundamental misconception of facts and law and erroneous interpretation of section 32(1)(ii) r.w. agreement, copy of which is placed on the paper book. He accordingly submitted that the order of the CIT(A) be upheld and the ground raised by the Revenue be dismissed. 108. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. A perusal of the copy of the business transfer agreement shows that the preamble of the agreement read as under:- "BUSINESS TRANSFER AGREEMENT This BUSINESS TRANSFER AGREEMENT ("Agreement") dated 1 st June 2012 is made by and between Ebix Software India Private Limited. ("Purchaser") with its Registered Office at 311, B 4 A Pariytan Vihar, Vasundhara E....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....te"), Seller sells, conveys, transfers, assigns, grants and delivers to the Purchaser and Purchaser purchases, acquires and receives from Seller its business undertakings as a going concern, as a slump sale, that is to say, all of the, Assets, Transferred Employees, Liabilities, Licenses, Contracts and Receivables, as defined in Definitions Schedule relating to the Business, free and clear of all liens, mortgages, pledges, security interests, restrictions, prior assignments, encumbrances and claims of every kind, nature or character (hereafter referred to as'the business undertaking'. 2.2 Purchase Price. As sole and entire consideration for the purchase of the business undertaking, Purchaser shall pay to the Seller a purchase price of Rupee Equivalent of USD 7.0 million on and subject to the terms of Article III herein below. 2.3 Assets. The term "Assets" means all tangible and intangible assets, properties, and rights used by the Seller to carry out the Business as specifically reflected in the list of Assets as set out in Exhibit 1 hereto. Seller shall deliver to the Purchaser such bills of sale, assignments, endorsements, and other recordable instruments of assignment, tra....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....justment. The Purchase Price shall be adjusted by such amount of the Receivable that have been transferred to the Purchaser but are realized by the Seller and such amount of payables as are transferred to the Purchaser and paid by the Seller. 3.4 It is clearly understood between the Parties that any amounts collected by Seller on or after payment of full consideration, from the Receivables transferred, shall be promptly transferred by Seller in favor of Purchaser." Similarly, article 9 of the agreement read as under:- "ARTICLE IX 9.1 Non Compete. In consideration for the purchase of Business, including the goodwill connected therewith, by the Purchaser, Seller agrees for a period of two years from the Transfer Date, not to directly or through an associate/Agent carry on or cause to carry on any business which is in competition with the Business. 109. From the above it is seen that Planet Online Private Limited has transferred to the purchaser, i.e., the assessee company its business undertaking as a going concern, as a slump sale that is to say, of all the assets, transferred employees, liabilities, licenses, contracts and receivables as defined in definition schedule relat....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....rchase price of the business and the net value of assets acquired on slump sale. The only dispute between the assessee and the Revenue is that according to the Revenue the amount of difference between the purchase price and the value of the assets should be allocated to non-compete fee in view of article IX of the agreement. However, in the light of the clear provision of Article II and III of the agreement, we do not find any merit in the aforesaid argument of the Revenue. 110. We find the Hon'ble Supreme Court in the case of CIT vs. Smifs Securities (supra) has held that excess consideration paid by the assessee over the value of net assets acquired by amalgamating company should be considered as goodwill arising on amalgamation and such goodwill is eligible asset for depreciation. The relevant observation of the Hon'ble Supreme Court reads as under:- "1. None appears for the respondent, though served. Heard learned counsel for the Department. Leave granted. This civil appeal concerns the Assessment Year 2003-2004. Three questions arise for determination by this Court. They are as follows: Question No.[a]: "Whether Stock Exchange Membership Cards are assets eligible for depr....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ther business or commercial rights of similar nature. A reading the words 'any other business or commercial rights of similar nature' in clause (b) of Explanation 3 indicates that goodwill would fall under the expression 'any other business or commercial right of a similar nature'. The principle of ejusdem generis would strictly apply while interpreting the said expression which finds place in Explanation 3(b). 5. In the circumstances, we are of the view that 'Goodwill' is an asset under Explanation 3(b) to Section 32( 1) of the Act. 6. One more aspect needs to be highlighted. In the present case, the Assessing Officer, as a matter of fact, came to the conclusion that no amount was actually paid on account of goodwill. This is a factual finding. The Commissioner of Income Tax (Appeals) '(CIT(A)', for short has come to the conclusion that the authorised representatives had filed copies of the Orders of the High Court ordering amalgamation of the above two Companies: that the assets and liabilities of M/s. YSN Shares and Securities Private Limited were transferred to the assessee for a consideration; that the difference between the cost of an asset and....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ted. 21. In view of the aforesaid, the question framed is answered in the negative, that is, in favour of the ITA No.1744/Del/2015 Assessee and against the Revenue. The Assessee's appeal (ITA No. 40/2015) is, accordingly, allowed." 112. The various other decisions relied on by Ld. counsel also support his case that the excess consideration paid by the assessee over the value of net assets acquired of amalgamating company should be considered as goodwill arising of amalgamation and depreciation is allowable on such goodwill. 113. So far as the decision of Hon'ble Delhi High Court in the case of Sharp Business Systems vs CIT, reported in 254 CTR 233 and relied on by the ld. DR is concerned the same, in our opinion, is not applicable to the facts of the present case. In that case, expenditure had been incurred of Rs. 3 crores towards noncompete fee and the same was claimed as revenue expenditure which on the facts of that case was held to be capital expenditure. In that case, the assessee also made an alternate contention that the expenditure be held to be intangible assets, eligible for depreciation under Section 32 of the IT Act. The Hon'ble High Court after considering the ....