2018 (3) TMI 1655

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....re that the assessee is engaged in the business of manufacturing speciality chemicals used in oil drilling industry. It commenced its operation during the year under consideration after purchase of business of M/s EP Industrial and Agrochemicals Pvt. Ltd. in February, 2007 as a going concern. Having purchased this business as a slump sale, the assessee got the assets valued by a firm of valuers. Total slump sale consideration was bifurcated into tangible and intangible assets. In the present appeal, we are concerned only with the amount attributed as non-compete fee of Rs. 10,72,10,000/- which is a part of the slump sale consideration. The AO has not disputed the bifurcation of slump sale consideration into different tangible and intangible....

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....o the assessee has been returned by the postal authorities with the remarks `Left'. As such, we are proceeding to dispose of the appeal ex parte qua the assessee. 5. It is observed that the assessee purchased the business of M/s EP Industrial & Agrochemicals Pvt. Ltd., in February, 2007 as a going concern and allocated Rs. 10.72 crore towards non-compete fee by treating it as an item of 'intangible asset.' We have noted supra that the AO has not disputed the allocation of Rs. 10.72 crore as non-compete fee out of total slump sale consideration. There is no cross appeal by the assessee. Thus the action of the ld. CIT(A) in treating such amount as not deductible as revenue expenditure in the year of payment, has attained finality. As such,....

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....as against the world at large or in legal parlance "in rem". However, in the case of a non-competition agreement or covenant, it was held that the advantage was a restricted one, in point of time. It did not 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". Every species of right spelt-out expressly by the Statute - i.e. of the intellectual property right and other advantages such as know-how, franchise, license etc. and even those considered by the Courts, such as goodwill can be said to be alienable. Such was not the case with an agreement not to compete which is purely personal. As a consequence, it is held that....