TaxTMI 
TaxTMI 
2011 (9) TMI 1025
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....ant amounting to ` 344,786,000/-, considering it as capital in nature. 2. Without prejudice to the above, the Learned Commissioner of Income-tax (Appeals) erred in law and on facts in rejecting your appellant's submissions that if the payments made for noncompetition/ restrictive covenant is to be considered as capital in nature then it should have been capitalized by apportioning it to various fixed assets/plant taken over by the appellant and depreciation should have been allowed on it as per the provisions of the Act." 2. Facts of the case in brief are that the assessee company has claimed an amount of ` 34.47 crores as revenue expenditure in the computation of income. Vide Note No. 1 below the computation of total income, the assesse....
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....A.O. in rejecting the claim of ` 34,47,86,000/- as revenue expenditure. Alternatively it was submitted that if the same is treated as capital in nature, then the same should have been capitalized by apportioning it to various fixed assets taken over by the assessee and depreciation on it should have been allowed as per the provisions of Income Tax Act, 1961. 2.1 However, the ld. CIT(A) was not convinced with the explanation given by the assessee and upheld the action of the A.O. by holding as under:- "The submissions of the A/R have been considered. It is noted that the payment of ` 34,47,86,000/- has been made by the appellant to M/s SGTL and to Shri R.S. Khemka to wardoff the completion. In other words, this payment has been made to res....
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.... 2001-02 wherein it has been held that depreciation is allowable on non-compete fees paid by the assessee. Referring to the decisions of Chennai Bench of ITAT in the case of ACIT vs. Real Image Tech. (P) Ltd. reported in (2009) 120 TTJ (Chennai) 983 and in the case of ITO vs. Medicorp Technologies India Ltd. reported in (2009) 122 TTJ (Chennai) 394, he submitted that the Tribunal following the decision in the case of Radaan Media Works India Ltd. (supra) has held that non-compete right acquired by the assessee company is eligible for depreciation under cl. (ii) of section 32(1) as intangible asset being of the same nature as business/commercial right of a patent etc. mentioned in that clause. He submitted that in the instant case, the claim....
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....gly allowed. 5. Grounds of appeal No. 3 by the assessee reads as under:- "The Learned Commissioner of Income Tax (Appeals) has erred in law and on facts in upholding the disallowance by the Assessing Officer in respect of preliminary expenditure claimed under section 35D of the Act to the extent of ` 206,320/-." 6. Facts of the case in brief are that the A.O. during the course of assessment proceedings noticed that the assessee has made a claim of ` 4,56,959/- u/s 35D of the I.T. Act. From the details furnished by the assessee the A.O. noted that under the head preliminary expenses of ` 45,69,590/-, the assessee has included an amount of ` 20,66,320/- as professional fees paid for FIPB and RBI approval and deduction u/s 35D has been clai....