TMI Blog2022 (7) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... mi Prasad Sahu, Accountant Member AND Shri K.Narasimha Chary, Judicial Member For the Assessee : Shri P.S.R.V.V.Surya Rao, CA For the Revenue : Shri Y.V.S.T.Sai,CIT-DR ORDER PER SHRI LAXMI PRASAD SAHU, A.M.: This appeal filed by the assessee is directed against the order dated 30.11.2016 of the Learned Commissioner of Income Tax (Appeals)-5, Hyderabad relating to AY 2001-02. On the following grounds of appeal: 1 The ld.CIT(A) erred in confirming the order of Assessing Officer and not appreciating the submission of assessee that the non-compete fee paid to Dr.PV Venugopal is an intangible asset eligible for depreciation u/s. 32(1)(ii) 2. The ld.CIT(A) failed to appreciate the submissions of assessee and erred in dismissing the ground of the assessee that DEPB is eligible for deduction u/s. 80HHC. 2. Brief facts of the case are that the assessment order passed by the AO pursuant to the order of ITAT in ITA No. 417 /Hyd/2006 vide order dated 25.07.2013. The AO observed as under:- with regards to non-compete fee of Rs.2.30 crores paid to Dr.P.V.Venugopal, the ITAt set aside the issue to the file of the Assessing Officer to consider allowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port of his argument, he relied on the following judgments 1. SKS Micro Finance Ltd vs DCIT(ITA No.435/Hyd/2010, 12222/Hyd/2011 1789/Hyd/11) ITAT, Hyderabad 2. ACIT vs. GE Plastics India Ltd. (ITA No.483/Ahd/2007) -ITAT, Ahmedabad 3. CIT vs. Ingersoll Rand International Ind.Ltd.- 2014 (6) TMI 934 - Karnataka High Court 4. CIT vs. Hindustan Coco Cola Beverages Pvt.Ltd.-2011(1) TMI 138- High Court of Delhi. 6. The ld. AR further submitted that in respect of ground No.2 that the assessee has received cash benefit which comes under section 28(iiid), but not the section 28(iiib), therefore assessee is eligible for claim of deduction u/s. 80HHC on the export benefits. He further submitted that the evidences are available with the assessee and if the assessee is given a chance for production of details in respect of the export benefits definitely the assessee will submit the details as required by the AO. 7. On the other hand the ld. DR relied on the order of the lower authorities and submitted that the issue is squarely covered by the judgment of Co-ordinate Bench of the Tribunal of ITAT, Delhi Bench in case of [2022] 139 taxmann.com 87 (Delhi Trib.) Sagar R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. 8. T he second question is as to whether the non compete fee is an asset in the nature of patents, copyrights, trademark, licence, franchises or any other business or commercial right of similar nature and as to whether the assessee is eligible to claim depreciation under section 32 of the Act. 9. The Tribunal took note of the decision of the High Court of Delhi in the assessee's own case for the Areva T D India Ltd. v. Dy. CIT [2012] 20 taxmann.com 29/208 Taxman 252/345 ITR 421 and allowed the appeal filed by the assessee thereby reversing the findings of the CIT(A). 10. Mrs. R. Hemalatha, learned Senior Standing Counsel appearing for the appellant/Revenue has placed reliance on the decision of the Delhi High Court in the case of Sharp Business System v. CIT [2012] 27 taxmann.com 50/211 Taxman 576 in support of her contention that the amount paid as non compete fee did not qualify for depreciation under section 32(1)(ii) of the Act. 11. In the decision in the case of Asianet Communications Ltd. v. CIT [2018] 96 taxmann.com 399/257 Taxman 473/407 ITR 706, a Division Bench of this Court, to which, one of us (TSSJ) was a party, had conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in fact, the Court itself had pointed out that is not the conclusive test to determine whether expenditure is in capital field or revenue. Thus, for the above reasons, we are not in respectful agreement with the reasoning given by the Hon'ble Division Bench in Sharp Business System (supra). 39. It would be relevant to note that, in the case of Sharp Business System (supra), the Joint-venture company was incorporated in the assessment year 2001-02 and in the first year of business, with a view to warding off competition, it entered into agreement by paying a non-compete fee of Rs. 73 Crores to L T Ltd., of setting-up or undertaking or assisting in the setting-up or undertaking any business in India, of selling, marketing and trade of electronic office products for seven years and this amount was treated as deferred revenue expenditure in the assessees books of accounts and writtenoff over corresponding period of seven years. There is a marked difference in the factual position in Sharp Business System (supra) and the factual position in the case on hand where the assessee's business continues to remain the same, and this is also one more reason to hold that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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