TaxTMI 
TaxTMI 
2018 (10) TMI 1217
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.... in view of the addition / disallowance on account of Depreciation on goodwill amounting to Rs. 1,29,25,1999. 2.2 Aggrieved by the order of assessment dt.28.03.2016 for Assessment Year 2013-14, the assessee preferred an appeal before the CIT (Appeals) - 6, Bangalore. The learned CIT (Appeals) allowed the assessee's appeal vide order dt.13.10.2017, following the decision of the co-ordinate bench of this Tribunal in the assessee's own case in ITA Nos.1185 & 1186/Bang/2016 dt.3.11.2016 for Assessment Years 2010-11 & 2011-12. 3. Revenue, being aggrieved by the order of the CIT (Appeals) - 6, Bangalore dt.13.10.2017 for Assessment Year 2013-14 has filed this appeal, wherein it has raised the following grounds :- 1. The order of the CIT (Appeals) is opposed to law and the facts and circumstances of the case. 2. On the facts and circumstances of the case, whether the Ld. CIT(A) is right in law in applying the ratio Of judgement in case of CIT vs Ingersoll Rand International Ltd where the facts of the instant case are different from those. 3. On the facts and circumstances of the case, whether the Ld. CIT(A) is right in allowing depreciation on the add....
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....ourt of Delhi cited (supra). 5.3.1 We have heard the rival contentions, perused and carefully considered the material on record; including the judicial decisions cited. We find that the issue of allowing depreciation on the additional amount paid by the assessee as goodwill has been considered and decided in favour of the assessee by co-ordinate benches of this Tribunal in the assessee's own case for Assessment Years 2010-11, 2011-12 and 2012-13 (supra), wherein the co-ordinate bench of this Tribunal has followed the decision of the Hon'ble Karnataka High Court in the case of Ingersol Rand International Ind Ltd. (supra) after duly considering the decision of the Hon'ble High Court of Delhi in the case of Sharp Business Systems (supra). At paras 4 to 7 of its order in ITA Nos.1185 & 1186/Bang/2016 dt.3.11.2016, the co-ordinate bench has held as under :- 4. Regarding the first issue, it is submitted by the learned AR of the assessee that the copy of Assets Purchase Agreement is available on pages 78 to 115 of the paper book and from the same, it can be seen that the assessee has purchased various tangible assets as listed on page 110 to 111 of the paper book and ....
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....ness right which is similar in nature to know - how, patents, copyrights, licenses, franchises etc and it falls in the category of "Intangible Assets" and consequently depreciation is allowable u/s 32 (1) (iii). 5. As against this, learned DR of the revenue supported the orders of the authorities below. He also submitted that it is noted by the learned CIT (A) in Para 14 of his order that in the Remand Report (Copy on pages 142 to 144 of the paper book), the A.O. has distinguished the facts of the present case with the facts in the case of CIT vs. M/s Ingersoll Rand International Ind. Ltd. (supra). At this juncture, a query was raised by the bench asking the learned DR of the revenue to point out the difference in facts as reported by the AO in the remand report. In reply, learned DR of the revenue pointed out that the A.O. reported that the AO has reproduced relevant observations of Hon'ble High Court as per which, in that case, the right acquired by way of non compete can be transferred to any other person. He submitted that in the present case, the rights acquired by the assessee by way of non compete cannot be transferred to any other person and therefore, this judgment i....
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....customers of the existing business or any other person either not. to do business with the person who has acquired the business and paid the non-compete tee or to do business with the per-son receiving the non-compete fee to do business with a person who is directly or indirectly in competition with the business which is being acquired. The right is acquired for carrying on the business and therefore, t is a business right. The word 'commercal' is defined in Black's Law Dictionary as 'related to or connected with trade and commerce in general 'commerce' is defined as 'the exchange of goods, productions or property of any kind, the buying, selling and exchanging of articles'. A right by way of non-compete is acquired essentially for trade and commerce and therefore, it will also qualify as a commercial right. A right acquired by way of non-compete can be transferred to any other person in the sense that the acquirer gets the right to enforce the performance of the terms of agreement under which a person is restraining the other businessman from competing with the assessee, he gets a vested. right which can be enforced under law arid without .that, the other businessman can compete w....
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.... with the person who has acquired the business and paid non compete fees or to do business with a person who is directly or indirectly in competition with the business which is being acquired. These rights are held to be business rights. Thereafter, it is noted by Hon'ble Karnataka High Court that this right can be transferred to any other person in the sense that the acquirer gets the right to enforce the performance of the terms of agreement under which a person is restrained from competing. In the present case also, it is specified in Para 11 of the agreement page 102 of the paper book that unless permitted by the assessee i.e. SMPL, WAVE and Mr. V. F. John Yesudhas will not do anything which may amount to competition with the present assessee. Hence in the present case also, the assessee i.e. the acquirer gets the right to enforce the performance of the terms of agreement under which the seller WAVE and Mr. V. F. John Yesudhas including their associates, partners and relatives shall not compete with the assessee i.e. the acquirer. Hence, in our considered opinion, the facts of the present case are similar to the facts in the case of the judgment in the case of CIT vs. M/s In....