9911796707
TMI Blog2020 (4) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. Disallowance of expenses incurred on ice boxes provided to dealers - whether expenditure incurred towards ice boxes and dealer sign board provided to hawkers/dealers carrying on brand names of the assessee was capital in nature? - HELD THAT:- The assessee explained that since the product sold by it were to be sold on particular temperature, the ice boxes were used by the hawkers for selling the items at aforesaid temperature. As in CIT vs Honda Siel Power Products Ltd. [ 2007 (8) TMI 251 - DELHI HIGH COURT] while deciding the issue of advances made for ownership of tools and dies which remained with the manufacturer, had allowed the same as revenue expenditure as it facilitated the trading operations of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record is bad in law and is liable to be quashed; 2.0 Disallowance of non-compete fees 2.1 That the Ld. CIT(A) erred in law in holding that the amount of Rs. 50,64,83,985 claimed on account of non-compete fees was capital expenditure in nature not eligible as a revenue expenditure by merely following orders for earlier years; 2.2 That the Ld. CIT(A) failed to appreciate that the expenditure incurred did not result in creation of an asset of enduring nature while holding that the appellant has acquired an asset of enduring nature; 2.3 That the Ld. CIT(A) failed to appreciate that the scope of the agreement was limited to a particular territory and that the bottlers were free to carry on business and were in fact carryin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be capital in nature then depreciation is to be allowed on the same. 5. Briefly in the facts of the case the assessee had claimed deduction of ₹ 50,64,83,985/- as non-compete fee amortized. The assessee explained that during the year under consideration, it had acquired running business of various bottlers directly or through amalgamation. The non-compete fee was paid to the bottlers for not disclosing the confidential information relating to the business and for not competing in similar line of business in their respective territories for a period of five years. The assessee followed practice of charging amounts to P L A/c on a pro-rata basis to be fully written off over the period of benefit. The Assessing Officer relying on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal (supra), we uphold the order of the CIT(A) and hold that the payment of non-compete fee was capital expenditure in the hands of the assessee, on which the assessee is not entitled to claim depreciation u/s 32 of the Act. The Tribunal had relied on the decision of Jurisdictional High Court in the case of Sharp Business System vs CIT (supra) and applied the same. We decide both the main issues and alternate grounds against the assessee. Admittedly the Hon ble High Court in assessee s own case has admitted the issues for adjudication and the same are pending. Thus, Ground Nos.2 to 2.6 raised by the assessee are dismissed. 8. Now, coming to Ground of appeal Nos. 3 to 3.2 which is against the disallowance of expenses incurred on ice boxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n filed by the Revenue against the order of CIT(A). He further stressed in Assessment Year 2005-06, similar recurring expenditure for carrying on business was incurred and claimed as revenue expenditure amounting to ₹ 5.10 crores (approx.), which was allowed. 10. The Ld. DR for the Revenue placed reliance on the orders of the authorities below and also the order of the Tribunal in assessee s own case for Assessment Year 2002-03. 11. We have heard the rival contentions and perused the record. The issue which arises in present ground is in respect of expenditure incurred by the assessee on ice boxes which were provided to the hawkers and on Signages. The said expenditure totaling to ₹ 15,30,88,574/- was disallowed by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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