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TMI Blog2019 (9) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in law and on the facts of the case in direction the AO to allow depreciation on non compete fee treating it as intangible asset. The CIT(A) failed to appreciate that non compete fee is not covered in intangible assets as held by the Hon'ble Delhi High Court in the case of Sharp Business System in ITA 492/2012. 3. The appellant craves leave to amend, withdraw and/or add any ground(s) of appeal at any time before or during the hearing of appeal." 3. The assessee was engaged in the business of providing healthcare services. The assessee filed its return of income declaring loss of Rs. 85,54,63,013/-. In response to the notices issued u/s 143(2) of the Income Tax Act, 1961, the assessee through its AR represented and information was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Hon'ble Delhi High Court in case of Areva T & D India Ltd. vs. DCIT [2012] 20 taxmann.com 29 (Delhi). The Ld. AR also relied upon the following decisions: i) CIT vs. Ingersoll Rand International Ind. Ltd. [2014] 48 taxmann.com 349 (Karnataka HC) ii) Pr. CIT vs. Ferromatic Milacron India (P.) Ltd. [2018] 99 taxmann.com 154 (Gujrat HC) iii) Kapi Chits (Kakatiya) P. Ltd. vs. ACIT [2017] 85 taxmann.com 300 (Hyd. Trib.) iv) DCIT vs. Zydus Wellness Ltd. [2016] 76 taxmann.com 328 (Ahmd. Trib.) v) Sharp Business System vs. CIT (ITA No.492/2012 order dated 05.11.2012) 7. We have heard both the parties and perused all the relevant material available on record. As regards to Ground No. 1 of the appeal, there is clear finding of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, copyright, trademark, license or franchise as or any other right of a similar kind which confers a business or commercial or any other business or commercial right of similar nature has to be "intangible asset". The nature of these rights mentioned clearly spell-out an element of exclusivity which enures to the assessee as a sequel to the ownership. In other words, but for the ownership of the intellectual property or know-how or license or franchise, it would be unable to either access the advantage or assert the right and the nature of the right mentioned or spelt-out in the provision as against the world at large or in legal parlance "in rem". However, in the case of a non-competition agreement or covenant, the advantage is a restric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt is of the opinion that the appeal is meritless and has to fail. It is accordingly dismissed. From the perusal of the decision of the Hon'ble jurisdictional High Court in case of Sharp Business System, it can be seen that non compete fee did not confer any exclusive right to carry-on the primary business activity. The right is restricted only to the particular party or individual and does not have the exclusivity over the rest of the world. Thus, non-compete fee cannot be termed as intangible asset. The Hon'ble High Court has also set out the differences between the rights conferred by goodwill and rights acquired by the non compete agreement. Therefore, the ratio of the decision of the Hon'ble Delhi High Court in case of Sharp Busines ..... X X X X Extracts X X X X X X X X Extracts X X X X
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