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TMI Blog2018 (10) TMI 1223X X X X Extracts X X X X X X X X Extracts X X X X ..... owing depreciation on non-compete fees. In the case of Ingersoll Rand International Ind. Ltd. [2014 (6) TMI 934 - KARNATAKA HIGH COURT] has held that whenever assessee makes payment of non-compete fee, commercial right comes into existence and therefore, that right which assessee acquires on payment of non-compete fee confers in him a commercial or a business right which is held to be similar in nature to knowhow, patents, copyrights, trade marks, licences, franchises and the commercial right so acquired by assessee unambiguously falls in category of an ‘intangible asset’ and, consequently, depreciation provided u/s 32(1)(ii) is to be allowed. In the case of Max India Ltd.[2007 (11) TMI 12 - SUPREME COURT OF INDIA] it is held that if two views were possible on the disputed issue on the day when the Commissioner passes the order, then the order u/s 263 is not tenable. AO had made necessary inquiries before allowing depreciation on non-compete fees and also the ground that two views were inherently possible on the same issue on the day when the Commissioner passed his order u/s 263, we are inclined to set aside the impugned order. - decided in favour of assessee. - ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is stated in the affidavit that the concerned person handling tax matters by an inadvertent error misplaced the captioned order. Moreover, since the order giving effect to the order passed by the CIT was not passed by the Department, the concerned executive was under an honest impression that the submissions of the appellant were accepted and no further 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 Collector, Land Acquisition and others vs. Katiji Others (AIR 1987 SC 1353), Archway Investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the above explanation of the appellant and relying on the above decision in M/s Sharp Business Systems, held the order passed by the AO u/s 143(3) dated 21.03.2014 as prejudicial to the interest of revenue and therefore directed the AO to modify the same as per his direction contained in the impugned order. 5. Before us, the Ld. counsel of the assessee submits that in the absence of lack of inquiry on the part of the AO, the assessment order cannot be treated as erroneous for the purpose of section 263. Reliance is placed by him on the decision of the Hon ble Bombay High Court in CIT v. Nirav Modi (241 Taxman 255). Also it is submitted by him that where two views are possible and the AO has taken one of the possible view which resulted in loss of revenue, the order cannot be treated as erroneous for the purpose of section 263. In this regard the Ld. counsel relies on the decision in Malabar Industrial Co. Ltd. (243 ITR 83) (SC), CIT v. Max India Ltd. (295 ITR 282) (SC), CIT v. Gabriel India Ltd. (203 ITR 108) (Bom HC), CIT v. Grasim Industries Ltd. (2014) 226 Taxman 165 (Bom HC), CIT v. LIC Housing Finance Ltd. (2014) 367 ITR 458/272 CTR 10 (Bom HC) and Grasim Indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 depreciation of ₹ 5,50,29,78,040/- out of the claim of ₹ 6,75,23,77,744/- made by the assessee-company in its revised return of income. The same is evident from para 9 of the assessment order dated 21.03.2014 made by the AO. We find that the assessee had filed a copy of (i) computation of depreciation admissible u/s 32(1)(ii) and (ii) details of licensing rights under the head Intangible Assets . Thus in the instant case the AO had made sufficient inquiries while allowing depreciation on non-compete fees. 7.1 In the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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