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TMI Blog2017 (2) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... e has raised several grounds in both years but effective grievances are only two common grievances in both years. First grievance is about disallowance of depreciation of Rs. 131,30,361/- in A.Y. 2010 - 11 and Rs. 229,78,131/- in A. Y. 2011 - 12 being depreciation on Goodwill. The second grievance is about disallowance of depreciation of Rs. 890,704/- in A.Y. 2010 - 11 and Rs. 565,953/- in A. Y. 2011 - 12 being depreciation on interiors. There is one more issue in A. Y. 2010 - 11 only regarding disallowance of depreciation of Rs. 404,253/- on computer software. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,42,884/- is not Goodwill but payment for eliminating Competition from wave Communication and it is normally termed as fee paid for non - competition. For this, he drew our attention to page 8 of the assessment order. Thereafter he submitted that as per the assessee, this payment of Rs. 1050.43 Lacs is for goodwill but even if the contention of the A. O. is accepted that this is not Goodwill but Non Compete Fee then also depreciation is allowable at same rate i.e. applicable to intangible assets. In support of this contention, he placed reliance on the judgment of Hon'ble Karnataka High Court rendered in the case of CIT vs. M/s Ingersoll Rand International Ind. Ltd. in ITA No. 452 of 2013 dated 30.06.2004 (227 Taxman.com 176), copy on pages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present case and in the present case, the judgment of Hon'ble Delhi High Court rendered in the case of Sharp Business System vs. CIT, 254 CTR 233 is applicable. 6. We have considered the rival submissions. Regarding the issue in respect of allowability of depreciation on Goodwill/Non Compete Fees, we find that as per the facts noted by Hon'ble Karnataka High Court in Para 8 as reproduced below, the right acquired by way of non compete can be transferred to any other person but in the case of Sharp Business System vs. CIT (Supra), Hon'ble Delhi high Court judgment is on the basis of this fact of that case that the right acquired by way of non compete cannot be transferred to any other person:- "8. Therefore what is to be seen is, what a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness which is similar to the business being acquired, from directly or indirectly soliciting or influencing clients or 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and money value. The term or any other business or commercial rights of similar nature has to be interpreted in such a way that it would have some similarities as other assets mentioned in Cl(b) of Expln.3. Here the doctrine of ejusdem generis would come into operation and therefore, the non-compete fee vests a right in the assessee to carry on business without competition which in turn confers a commercial right to carry on business smoothly. When one the expenditure incurred for acquiring the said right is held to be capital in nature. Consequently, the depreciation provided under sec.32(1)(ii) is attracted and the assessee would be entitled to the deduction as provided in the said provision i.e precisely what the Tribunal has held". 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Ingersoll Rand International Ind. Ltd. (supra) and in the present case also, this right acquired by the assessee can be transferred to any other person in the sense that the assessee acquirer gets the right to enforce the performance of the terms of agreement under which the seller is restrained from competing. Therefore, respectfu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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