TaxTMI 
TaxTMI 
2018 (10) TMI 1223
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....2. The grounds of appeal filed by the assessee read as under: 1. That on facts and in the circumstances of the case, action of the Ld. CIT (LTU) to initiate revision proceedings under Suction. 263 was unjustified and bad in law in as much as specific responses on the singular issue covered by the revision notice sought by the assessing officer in the assessment proceedings were duly furnished by the appellant and a considered view was taken by the Assessing Officer. 2. That on facts and in the circumstance of the case, Ld. CIT- LTU was not justified and grossly erred in not appreciating that non-compete fee paid represents a commercial right and enables the appellant in maintaining and enhancing its profitability of its bu....
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....action was necessary. However, the appellant received a notice dated 21.06.2016 from the office of the Assistant Commissioner of Income Tax (LTU) and served on the appellant on 28.06.2016 calling upon the appellant to appear before him. Upon inquiry at the office, the appellant was informed that the said notice was served to discuss the order passed u/s 263 on 29.03.2016. The concerned executive thereafter traced the order that was inadvertently misfiled. In the circumstances, the order against which the appeal is being filed could be traced only after the expiry of time limit of filing appeal before the ITAT. Therefore, it is submitted that the delay of 35 days in filing the appeal be condoned. Reliance is placed by him on the decision in ....
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....utation of income and claimed depreciation thereon and the same was allowed by the Assessing Officer (AO). The CIT, then referred to the judgment of the Hon'ble Delhi High Court in M/s Sharp Business Systems v. CIT (2012) 211 Taxman 576, stating that non-compete fees paid by the taxpayer was capital in nature as the arrangement was to endure for a substantial period. Further it is held therein that no depreciation is allowable as the right of non-compete fees acquired by the taxpayer was restrictive and personal in nature and it was not an intangible right enforceable against the world at large. The said allowance by the AO resulted in under assessment of to that extent, involving tax effect of Rs. 42,48,750/-. In response to a show cause n....
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....counsel submits that both conditions of section 263 i.e. order is 'erroneous' and 'prejudicial to the interest of revenue' are conjuctive. He relies on the decision in CIT v. Greenworld Corporation (181 Taxman 111) (SC), Malabar Industrial Co. Ltd. v. CIT (243 ITR 83) (SC), CIT v. Max India Ltd. (295 ITR 282) (SC). Finally, it is submitted by the Ld. counsel that the expenditure incurred for acquiring non-compete right is capital in nature entitled to depreciation u/s 32(1)(ii) of the Act. To support his contentions, reliance is placed by him on the decision in CIT v. Ingersoll Rand International Ind. Ltd. (227 Taxman 176) (Kar HC) (2014) and Pentasoft Technologies Ltd. v. DCIT (222 Taxman 209) (Mad HC) (2013). 6. On the other hand, t....
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....ymers (P.) Ltd. (ITA No. 1110/Del/2013 for the AY 2007-08). With the above submissions, the Ld. DR strongly supports the order passed by the CIT u/s 263 of the Act. 7. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decision are given below. During the course of assessment proceedings, u/s 143(3) the AO vide questionnaire issued along with notice dated 26.06.2013 had called for explanation of the assessee to justify its claim of depreciation on non-compete fees. In reply to it, the assessee vide written submission dated 15.01.2014 had explained the basis on which it had claimed depreciation on non-compete fees. It is found that the AO had made adequate inquiry while allowing ....
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....on-compete fee, since agreement between parties was a composite agreement, assessee was entitled to depreciation on intellectual property rights as well as on non-compete fees". On the other hand, in the decision in Sharp Business Systems (supra), relied on by the CIT, it is held "that every species of right spelt out expressly by the Statute i.e. of the intellectual property right and other advantages such as knowhow, franchise, license etc. and even those considered by the Courts, such as goodwill can be said to be alienable. Such is not the case with an agreement not to compete which is purely personal." To recapitulate, we have two set of contrary decisions of the High Courts. On the one hand we have Ingersoll Rand International I....