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TMI Blog2011 (9) TMI 1025X X X X Extracts X X X X X X X X Extracts X X X X ..... on facts in upholding the disallowance made by the Assessing Officer in respect of payments made for noncompetition/ restrictive covenant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue expenditure and added the same to the total income of the assessee. 2.2 Before the ld. CIT(A), the assessee challenged the action of the 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 ` 34,47,86,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Chennai Bench of ITAT in the case of ACIT vs. Radaan Media Works India Ltd. in ITA No. 2241/Mds/2006 order dt. 14th December, 2007 for A.Y. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the provisions of the Act by apportioning it to various fixed assets/plant and machinery taken over by the assessee. Ground of appeal No. 2 is accordingly 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 expens ..... X X X X Extracts X X X X X X X X Extracts X X X X
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