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TMI Blog2020 (10) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... which is accepted in the order of assessment cannot be a basis to assume that the resources of non-SEZ units have been used for earning the revenue in SEZ units. So far as the allegation of the CIT, DR that the assessee has failed to submit specific details to specific queries during the course of assessment proceedings is concerned, we find from the paper book that the assessee has in fact filed detailed reply before the AO to the queries raised point-wise. Therefore, this allegation of the ld. CIT, DR in our opinion is without any basis. The assessee has not claimed the loss of Hyderabad and Chennai unit while computing the income. In our opinion, once separate books of account have been maintained for each of the undertakings, there is no basis for the AO to allege that any of the expenses of non-SEZ units pertained to revenue of eligible units. Once such expenses has also not been claimed, the same is of no consequences. At best the AO could have reduced the net expenditure claimed from the deduction under section 10AA of the Act and nothing more but the same could not be a reason for the AO to deny the claim of deduction under section 10AA. Therefore, to suggest that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espectively. 2. Since common issues are involved in both these appeals, therefore, these were heard together and are being disposed of by this common order. ITA No.5274/Del/2017 (A.Y. 2013-14) 3. Facts of the case, in brief, are that the assessee is a wholly owned subsidiary of Ebix Singapore Pvt. Ltd. and is engaged in the business of rendering information technology/information technology enabled services (IT/ITES). It filed its return of income on 30.11.2013 declaring nil income after claiming deduction of ₹ 226,98,41,758/- under section 10AA of the IT Act. However, the assessee has paid tax u/s 115JB on book profit of ₹ 205,06,58,504/-. Since the assessee had entered into certain international transaction, the AO referred the matter to the TPO for determination of the ALP of the international transaction. However, the TPO did not draw any adverse inference in respect of such international transaction undertaken by the assessee. So far as the other issues are concerned, the AO, after considering the various replies given by the assessee, rejected the claim of deduction u/s 10AA of the Act made by the assessee in respect of income from six SEZ units and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of MAT since tax payable as per MAT is more than the tax payable as per normal provisions of the Act, Expenses of Hyderabad unit were not added in the light of the CBDT circular dated 16.07.2013 wherein Assessee can set off losses of ineligible units against the profits of eligible units. Copy of the circular is attached herewith for your reference as Annexure B, without prejudice to the above, even if expenses of Hyderabad unit are added back there would be no revenue loss as tax payable as per the MAT provisions would be more than the tax payable as per normal provisions .. Furthermore, all the employees which were forming part of these two units in preceding assessment year continued to remain employees of these two units during the subject year under assessment, except for routine hiring and exit of employees in the normal course of business operations. Further, there has been no transfer of employees by the Assessee from any other business units to these two business units during the subject year under assessment. During the subject year under assessment, these two units were continuing business operations carried forward from the previous year, and there has been no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B-4A, Pariyattan Vihar, Vasundhara Enclave, New Delhi and there is separate workplace at Noida DTA. He observed that the expenses related to these offices are not eligible for being considered with any SEZ units. According to the AO, these expenses have not been claimed separately and, therefore, they have been clubbed with the expenses of Noida, SEZ. This according to him, is not allowable for deduction u/s 10AA of the Act as it amounts to splitting up of/reconstruction of a business already in existence. From the reply furnished by the assessee on 20th December, 2016, he noted that the assessee has included other income of ₹ 82,88,099/- in computation of profits on four SEZ undertakings as under: 11. He noted that Note No.23 of P L Account of the company indicates that other income includes Interest on Bank Deposits and Other Income. According to the AO, this income of ₹ 82,88,099/- cannot be considered as Profits Gains derived from the Export of Article/Things/ from Services as necessitated in Section 10AA. He, therefore, held that this income is to be excluded from the Profits of the Undertakings for Computation of eligible Profits of the eligible Undertaking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earning the tax free income of SEZ units. Similarly, the claim of expenses of ₹ 21,86,67,174/- (including ₹ 15.00,35,220/- for Employee Benefit Expenses) as against revenue of ₹ 2.27,74,589/- is not justifiable. 15. The AO observed that in the NOIDA SEZ, the assessee has earned Revenue from operations of ₹ 221.57 Crores as against Employee Benefit Expense of ₹ 18.28 Crore, whereas, in the Non-SEZ units this ratio of Revenue to Employee Benefit Expense is very high. This-again indicates that the Resources of Non-SEZ units have been utilized for the tax free income of SEZ units. The AO analysed the Employee Benefit Expenses as compared to Revenue from Operations of each unit which is as under:~ Name of the Unit Revenue from Operations Employee Benefit Expenses (EBE) % of EBE to Revenue from Operations NOIDA SEZ (Ebix SEZ) 221.57 18.28 8.25% NAGPUR SEZ (Ebix SEZ) 1.0,00 4.64 46.4% fO-MBATORh SEZ (Planet Online) 14.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poration. A chart tabulating the status of the returns filed for assessment year's 2007-08 to 2011-12 is tabulated hereunder: AY Date of Filing of return Income declared after claiming exemption u/s 10B of Act Income assessed after claiming exemption u/s 10B of the Act Date of order Assessment u/s (pages of Paper Book) 2007-08 31/10/2007 50,42,087 50,42,087 12.11,2010 143(3} 2008-09 28/09/2008 75,67,921 75,67,921 28.09.2008 143(1) 2009-10 30/09/2009 5,25,000 5,25,000 05.03.2013 143(3) 2010-11 30/09/2010 NIL NIL 20.02.2014 143(3) (262-266) 2011-12 30/09/2011 38,13,116 38,13,116 20.02.2015 143(3) (267-271) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclared after claiming exemption u/s 10AA of the Act Income assessed after claiming exemption u/s 10AA of the Act Date of order u/s 143(3) of the Act 28.11.2012 NIL (pages 230 235 of Paper Book and 272- 328 of Paper Book)) NIL 29.1.2016 (pages 224 - 229 of Paper Book) That subsequently on 1.6.2012, the company entered into a business transfer agreement (copy placed at pages 106-116 of Paper Book) with M/s. Planet Online (P) Ltd. to purchase the business undertakings for a consideration of ₹ 38,53,50,000/- (USD 7 miilion) as on going concern on slump sale basis. The business undertakings comprised of assets, transferred employees, liabilities, licenses, contracts and receivables. - 3.5 As a result of the above, two eligible units at Coimbatore and Uppal stood owned by the company and another non eligible unit at Hyderabad also stood acquired by the company. 3.6 In the nutshell, as a result of the aforesaid, the company owned four eligible units and two non eligible units during the assessment years 2013-14 and 2014-15. The details of the eligible units ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 144,89,55,520 (231) Appellant company Nil 29.1.2016 (224-229) II Nagpur SEZ AY Deduction claimed (in Rs.) (page of PB) Entity in which, deduction claimed Disallowance if any Date of order u/s 143(3) of the Act (Pages of PB) 2011-12 31,23,74,139 (462,465-466) Ebix SEZ Nil 17.2.2015 (481-483) 2012-13 6,29,98,996 (232) Appellant company Nil 29,1.2016 (224-229) III Coimbatore SEZ AY Deduction claimed (Rs.) Entity in which, deduction claimed Disallowance, if any 2011-12 61,644 (532-533) Planet Online (P) Ltd. Nil 2012-13 49,62,722 (586,588) Planet Online (P) Ltd. Nil IV Uppal SEZ AY Deduction claimed (Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 308 ITR 161, it was argued that following the rule of consistency alone the AO should not have rejected the claim of deduction in respect of Noida and Nagpur units. 21. It was argued that all the four undertakings, i.e., Noida, Nagpur, Coimbatore and Uppal were eligible for the deduction having been set up in the preceding assessment years wherein deduction claimed stood duly allowed and, therefore, there could have been no valid reason or justification to deny claim of deduction in respect of these undertakings in the instant assessment year. Relying on various decisions, it was argued that the amalgamation of the undertaking could neither in law nor on facts be made a basis to deny the legitimate claim of deduction and does not amount to splitting up or reconstruction of business already in existence. The provisions of section 10AA(5) were brought to the notice of the CIT(A) and it was argued that the above provision of the Act is an enabling provision to enable the claim of deduction so as to transfer all the eligible unit to another unit in a scheme of amalgamation or demerger. Relying on various decisions, it was argued that acquisition of an undertaking on slump sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer at page 3 of the order of assessment in para 1 has incorrectly noted that in financial year 2012-13, there was major change in undertaking owned by the company. He has incorrectly noted that prior to this period, the assessee was only having business undertaking at Noida and it is also only after composite scheme of arrangement and business transfer agreement during the assessment year, the assessee company owned six undertakings/units. The Assessing Officer has factually erred in holding that the units of Noida and Nagpur came to be owned by the company in the instant year. It is submitted that this finding is contrary to his own observation at page 3 in para 3 of the order of assessment. 23. Various inconsistencies and incorrect facts recorded by the AO were brought to the notice of the CIT(A). It was submitted that the assessee while computing the consolidated income has not only reduced the depreciation of SEZ units, but also reduced the depreciation of non-SEZ units and while computing the aggregate income the assessee reduced the entire claim of depreciation the break-up of which is as under:- Sr No. Unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sources of non-SEZ units have been used for earning the revenue in SEZ units is concerned, it was argued that the same is factually incorrect. It was submitted that the sum of ₹ 19,14,995/- and ₹ 3 lakhs respectively represent expenditure incurred on the guest house which has been added back to avoid any possible dispute though there is no material to suggest that the expenses have any bearing on the non-SEZ units. It was argued that merely because the above sums have been added back by using the narration as explained pertaining to non-SEZ units available made a basis to assume that resources of non-SEZ units have been utilized for earning the revenue in SEZ units. So far as the allegation of the AO that deduction u/s 10AA is not allowable as there is splitting up/reconstruction of business already in existence and since the expenses relating to the registered office at Vasundhara Enclave, New Delhi and Noida DTA have been clubbed with the Noida SEZ is concerned, it was submitted that the above observation is factually incorrect and there is no expenditure incurred and claimed in respect of the registered office of the company. So far as the Noida DTA is concerned, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gibility of the unit is determined and not of the assessee. So far as the various allegations/observations of the AO are concerned, the ld.CIT(A) held that those are factually incorrect. Relying on various decisions, the ld.CIT(A) deleted the disallowance of ₹ 226,98,41,758/- made by the AO u/s 10AA of the Act. 27. Aggrieved with such order of the CIT(A), the Revenue is in appeal before us. 28. The ld. DR strongly supported the order of the AO. He submitted that the ld.CIT(A) has simply reproduced and relied on the submissions made by the assessee during the appeal proceedings and has deleted the addition made by the AO without appreciating the various facts brought on record by the AO and without providing any proper opportunity to the AO. He submitted that the ld.CIT(A) while holding that figure of ₹ 19,14,995 and ₹ 3 lakhs represent expenses incurred on guest house and, therefore, were added back, did not appreciate that such an explanation was never given before the AO and, on the contrary, in the unitwise computation of income it was mentioned that these are in the nature of inadmissible expenses of non-SEZ unit. He submitted that the Hon ble Delhi H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this presumption on the part of the CIT, DR is based on hypothesis that the order of the Hon ble Delhi High Court is dated 30th April, 2012 and, therefore, this claim became effective in F.Y. 2012-13 relevant to A.Y. 2013- 14. Referring to the copy of the assessment order, he submitted that the effective date of scheme was w.e.f. 01.04.2011 which is evident from para 3, page 3 of the assessment order. Therefore, the basis of the argument of the ld. CIT, DR is misconceived, misplaced and intangible. He submitted that the first year of claim of deduction was A.Y. 2012-13 and not A.Y. 2013-14. Further, the AO, in the order passed for A.Y. 2012-13 has allowed the claim of deduction u/s 10AA. Further, all these units were set up much prior to the instant year where too deduction has been allowed as such and, therefore, having regard to the settled position of law, claim has to be examined in the year in which the unit was set up and, therefore, denial of deduction u/s 10AA in the instant year is contrary to the provisions of law. 31. The ld. Counsel for the assessee submitted that the assessee in the instant case has maintained complete books of account which were duly audited and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Services Ltd. iii) 214 CTR 227 (Del) CIT vs. Jagson International Ltd. iv) 216 ITR 548 (Bom) CIT vs. Paul Brothers. v) 349 ITR 309 (Bom) CIT vs. Western Outdoor Interactive (P)Ltd. vi) 349 ITR 150 (Bom) Direct Information (P) Ltd. Vs. ITO vii) 123 ITR 669 (Guj) C.I.T. v Saurashtra Cement and Chemicals. viii) 267 ITR 774 (AP) G.B. Bros and Konda Rajagopala Chetty vs. ITO ix) 133 ITR 687 (MP) CIT vs. Bhilai Enginering Corporation x) ITA No. 477/2013 dated 28.7.2014 (Kar) M/s Ace Multi Axes Systems Ltd. Vs. DCIT xi) 244 Taxman 217 (SC) CIT v. Defree Engineering (P) Ltd. xii) 209 Taxman 76 (Mad)(Mag) Sterilite Industries (India) Ltd. v. ACIT xiii) 243 Taxman 408 (Mad) CIT v. P.S. Velusamy 35. The ld. Counsel for the assessee submitted that mere amalgamation of the undertaking could neither in law nor on fact be made a basis to deny a legitimate claim of deduction of the assessee company and does not amount to splitting up or reconstruction of business already in existence. Referring to the provisions of section 10AA(5), he submitted that the same is an enabling provision to enable claim of deduction despite transfer of the eligible unit to another u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hasis is on the unit whose profits are to be computed and, which, thereafter have to be deducted from the total income of the assessee. Referring to the Circular issued by the CBDT, vide F. No.15/5/63-IT(A-I), dated 13th December, 1963, he submitted that the CBDT is of the view that the relief would be available for the successor. Referring to the following decisions, he submitted that following the aforesaid Circular, relief u/s 80J of the Act was granted:- i) 87 Taxman 101 (Cal) CIT v. P. K. Engineering and Forging (P) Ltd. ii) 233 ITR 207 (Mad) AGS Timber Chemical Industries Pvt. Ltd. v. CIT iii) 98 ITR 119 (Mad) Madras Machine Tools Manufacturers Ltd. v. CIT iv) 205 ITR 19 (Ker) Kerala State Cashew Dev. Corpn. v. CIT v) 213 ITR 660 (Bom) CIT v. Tyresoles Concessionaries Pvt. Ltd. vi) 212 ITR 1 (Bom) CIT v. Dandeli Ferro Alloy (P) Ltd.. vii) 160 ITD 540 (Asr) Aggarwal Co. v. DCIT viii) 391 ITR 274 (SC) CIT v. Yokogawa India Ltd. (pages 443-444 of Paper Book) ix) 129 TTJ 273 (Chennai) Scientific Atlanta India Technology (P) Ltd. v. ACIT 40. So far as the various allegations/observations made by the AO are concerned, the ld. Counsel strongly ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereas the same was acquired by the assessee during A.Y. 2012-13 and, therefore, the period under consideration is second year of claiming exemption u/s 10AA of the Act by the assessee. 42. Referring to page 3, para 3 of the assessment order, he submitted that the AO himself has admitted that the scheme of amalgamation of Ebix Software India Pvt. Ltd. with the assessee company is w.e.f. 01.04.2011 and, therefore, units of both Noida and Nagpur hereon owned by the amalgamating company, namely, M/s Ebix Software India Pvt. Ltd. now stood owned by the assessee company as an amalgamated company from A.Y. 2012-13. He submitted that the deduction claimed by the assessee company of both the eligible units, namely, Noida and Nagpur stood allowed as such in the immediately preceding assessment year, i.e., A.Y. 2012-13 in the orders passed u/s 143(3). Therefore, the findig that the issue of claim of deduction has to be examined for the first time in the case of the assessee for A.Y. 2013-14 is factually incorrect. Since deduction u/s 10AA of the Act was already examined in the case of the assessee so far as Noida and Nagpur for the first time in A.Y. 2012-13 and the same stands allowed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r non-eligible undertakings owned by the assessee company and the audit report in the prescribed form u/s 10AA had been placed on record in the instant assessment proceedings, and no defects were found or pointed out in respect of books of account or the P L Account of either the eligible undertakings or non-eligible undertakings, any adverse observation on account of variation of profits or losses is absolutely misconceived and thereby the claim of deduction u/s 10AA cannot be denied. Referring to the decision of the Hon ble Delhi High Court in the case of PCIT vs. Cincom Systems India (P) Ltd., 103 taxmann.com 161 (Delhi), the ld. Counsel submitted that the Hon ble High Court in the said decision has held that separate and selected accounts cannot be rejected on the ground that profit margin of the STPI unit was higher than the profit margin of the non-STPI unit without pointing out any discrepancy error or mistake in the accounts. 46. The ld. Counsel for the assessee submitted that the explanation furnished during the course of assessment proceedings in no manner whatsoever has been rebutted and, therefore, in absence of rejection of the explanation tendered by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EZ is concerned, he submitted that the same is also incorrect since no expenditure has been incurred and claim in respect of the registered office of the assessee company except depreciation of ₹ 52,74,157/-. He submitted that unsubstantiated observation does not meet the rule of law and, therefore, cannot be relied upon to draw any adverse inference against the assessee. Referring to the decision of the Hon ble Supreme Court in the case of Bajaj Tempo Ltd. vs. CIT, reported in 196 ITR 188(SC), he submitted that the claim of deduction should be examined only in the year of formulation and not subsequently. 48. So far as the allegation of the AO that units have been acquired on slump sale basis is concerned, he submitted that the same could not be a ground to deny the claim of deduction in the instant year. He submitted that the above observation of the AO is factually incorrect and legally misconceived. He submitted that the assessee has established that it purchased undertaking on going concern basis, namely, Coimbatore SEZ and Uppal SEZ from M/s Planet Online Pvt. Ltd. who were eligible undertaking u/s 10AA of the Act. Once the units are eligible undertakings there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts 80 - 80 Deprecation and amortization expenses 14,15,441 3,50,65,473 3,64,80,914 Other expenses 1,14,28,266 3,35,66,482 4,49,94,748 Foreign Exchange gain and loss - - - Total Expenses (IV) 3,16,90,329 21,86,67,175 25,03,57,504 V Profit before exceptional and extraordinary items (V) = (III-IV) (3,16,90,329) (19,58,92,586) (22,75,82,915) VI Add Back: Depreciation and Amortization expenses 14,15,441 3,50,65,473 3,64.80,914 Other expenses/employee 3,01,30,343 21,85,82,287 24,87,12,630 Total Add Back (VI) 3,15,45,784 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) The assessee was only having business undertaking at Noida and it is also only after composite scheme of arrangement and business transfer agreement during the assessment year, the assessee company owns six undertakings/units; iii) The assessee has not shown any domestic revenue from Noida DTA and the resources and infrastructure of Noida DTA has been used for earning revenue in Noida SEZ; iv) There is variation in the profits of SEZ undertakings. v) There are differential figures of inadmissible expenses of non-SEZ units in consolidated computation of income and individual computation of income; vi) Resources of non-SEZ units have been used for earning of revenue in SEZ units; vii) Expenses of Noida DTA have been clubbed up with the expenses of Noida SEZ; viii) Units have been acquired on slum sale basis; ix) Disproportionate expenses against revenue show fictitious arrangement in which the entire resources of Chennai unit or Hyderabad unit have been utilized for earning tax free income of SEZ units; x) The ratio of employee expenses to revenue under each of the unit show that the deduction claimed by the assessee company in respect of eligible unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Coimbatore SEZ 4,42,95,190 4 Hyderabad SEZ 8,25,79,324 Total 227,02,14,376 55. From the various details furnished by the assessee, we find the historical position in respect of the deduction in respect of the aforesaid four undertakings are as under:- AY Entity in which, deduction claimed Deduction claimed (in Rs.) (page of PB) Disallowance if any Date of order u/ s 143(3 of the Act (Pages of PB) 2010-11 Ebix SEZ (236-293) 65,27,64,881 (285-287) Nil 20 7 Ni l 4 (289-293) 2011-12 Ebix SEZ (294-339) 142,07,41,308 (332-334) Nil 17.2.2015 (337-339) 2012-13 Assessee company (224-235) 144,89,55,520 (231, 235) Nil 29.1.2016 (224-229) II Nagpur SEZ AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh litigation because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted, litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted and there is abundant authority reiterating that principle. Thirdly, the same principle, namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken. 30. Reference was also made to Parashuram Pottery Works Ltd. v. Income Tax Officer, [1977] 106 ITR 1 (SC) and then it was held: We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment years 1988-89, 1989-1990 and 1990- 1991 has not been disturbed by the Assessing Officer and there has been no change that could justify the Assessing officer adopting a different view in the assessment years 1991-92 and thereafter. As stated hereinbefore, in certain cases where the issues involved have attained finality on account of the subject matter of dispute having been finally adjudicated, the question of reopening and revisiting the same issue again in subsequent years would not arise. This is based on the principle that there should be finality in all legal proceedings. The Supreme Court in the case of Parashuram Pottery Works Co. Ltd. v. ITO: [1977] 106 ITR 1 had held as under:- that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. 75. In the facts of the present case, where although the Assessing officer has allowed the assessee deduction under section 80-I of the Act in the preceding years, one may s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit are inextricably linked with the previous year relevant to the assessment year in which the new undertaking was formed. In such circumstances, it would not be possible for an Assessing Officer to reject the claim of an assessee for deduction under Section 80-I of the Act on the ground that the industrial undertaking in respect of which deduction is claimed did not fulfill the conditions as specified in Section 80- I(2) of the Act, without undermining the basis on which the deduction was granted to the assessee in the initial assessment year. This in our view would not be permissible unless the past assessments are also disturbed. 60. Similarly, the Hon ble Bombay High Court in the case of CIT vs. Western Outdoor Interactive (P) Ltd., 349 ITR 309 (Bom) has observed as under:- 5. On the other hand, Mr. Percy Pardiwalla, Senior Counsel appearing on behalf of the respondent-assessee submitted that in view of the decision of this court in the matter of Commissioner of Income Tax v. Paul Brothers reported in 216 ITR 548 and M/s.Direct Information Private Ltd. v. ITO dated 29/9/2011 in Writ Petition No.1479/2011 (Reported in 2011 (12) LJSOFT 320), the issue is no longer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uent years. More particularly so, when the revenue has not even suggested that there was any change in the facts warranting a different view for subsequent years. In this case for the assessment years 2000-01 and 2001-02 the relief granted under Section 10A of the Act to SEEPZ unit has not been withdrawn. There is no change in the facts which were in existence during the assessment year 2000-01 vis a vis the claim to exemption under section 10A of the Act. Therefore, it is not open to the department to deny the benefit of Section 10A for subsequent assessment years i. e. assessment years 2002-03 and 2003-04 and 2004-05. Besides that, on consideration of the facts involved both the Commissioner of Income Tax (Appeals) and the Tribunal have recorded a finding of fact that the SEEPZ unit is not formed by splitting up of the first unit. 61. So far as the question as to whether amalgamation of the Noida SEZ and Nagpur SEZ with the assessee company can be a ground to suggest that the same amounts to splitting up or reconstruction of business already in existence is concerned, we find the provisions of section 10AA(5) read as under:- (5) Where any undertaking being the Unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Assessee was formed by transfer to a new business, of machinery or plant previously used by M/S. Last Peak BPO Pvt. Ltd. and therefore there was violation of Sec.10AA(4)(iii) of the Act. 31. The CIT(A) did not decide on this issue at all. We have considered the order of the AO and are of the view that the reason given by the AO, to say the least, is frivolous. It is undisputed position that M/S. Last Peak BPO Pvt. Ltd. was enjoying STP unit status as it was in ITES. Therefore there was no question of the Assessee having been formed by splitting up or reconstruction of a unit already in existence. The Assessee is already an existing unit. The deduction u/s. 10AA of the Act is claimed for the period within 10 years contemplated by Sec. 10AA of the Act even after considering the exemption already availed by the Assessee. Even M/S. Last Peak BPO Pvt. Ltd. had not availed Sec. 10A deduction for period beyond 10 years before amalgamation with the Assessee. In such circumstances, the very basis of application of Sec. 10AA(4)(ii) (iii) of the Act is flawed. We are of the view that the objection of the AO in this regard is without any merit. 63. Similarly the Bangalore Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ITAT Bench B Bangalore in ITA No.623 847/Bang/2010 for the assessment years 2004- 05 2005-06 respectively in the case of DCIT v. M/s. LG Soft India Pvt. Ltd., order dated 19.05.2010 wherein vide para 10 it has been held as under:- 10. We considered the rival contentions and the facts of the case reflected in the orders passed by the lower authorities. As rightly pointed out by the CIT(A), the assessee s undertaking existed in the same place, form and substance and did carry on the same business before and after the change in the legal character of the form of organization. Formerly, it was a branch establishment of non-resident company/foreign company but later on, it was converted into a subsidiary company. But for the above change of the organizational status, the same unit continued to function throughout the time. Therefore, it is quite fruitless to argue that the organizational change has caused conversion of the existing unit to a new unit. There is no such splitting up or reconstruction of an existing business in the case of a branch establishment becoming a subsidiary establishment. The assessee s unit satisfied all the conditions stipulated in the Act and wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He also placed reliance upon the decision of the Calcutta High Court in the case of CIT vs. P.K. Engg. Forging (P) Ltd., reported in 87 Taxman 101 wherein, while considering the assessee s claim for deduction u/s. 80J, it was held that where the industrial undertaking run by a firm which had been allowed deduction u/s 80-J for a period of 5 years, it would be entitled to benefit of residuary period. He also placed reliance upon the decision of the Delhi Bench of the Tribunal in the case of Tech Books Electronics Services (P) Ltd. vs. Addl. CIT wherein it was held that merely because of change in ownership the exemption cannot be denied. Another decision relied upon by him is in the case of Kumaran Systems (P) Ltd. vs. ACIT wherein it was held that where a firm is converted into a company and there was change only in the composition of ownership and not the undertaking and business, the exemption allowed to the firm u/s 10A of the Act could not be denied to the company merely because it had been separately granted recognition. 5. Having heard both the sides and having considered the rival submissions, we find that the issue is squarely covered by the decisions relied upon by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a business already in existence: Provided that this condition shall not apply in respect of any undertaking, being the Unit, which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section; ( iii ) it is not formed by the transfer to a new business, of machinery or plant previously used for any purpose. Explanation. -The provisions of Explanations 1 and 2 to sub-section (3) of section 80-IA shall apply for the purposes of clause ( iii ) of this sub-section as they apply for the purposes of clause ( ii ) of that sub-section. 66. We find, the Hon ble Supreme Court in the case of Bajaj Tempo Ltd. vs. CIT (supra) has observed as under:- The restriction or denial of benefit arises not by transfer of building or material to the new company but that it should not be farmed by such transfer. This is the key to interpretation. The formation should not be by such transfer, The emphasis is on formation not on use. 'Therefore it is not transfer of building or material but the one which ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he somewhat discordant use of the expression total income of the assessee in Section 10A has already been dealt with earlier and in the overall scenario unfolded by the provisions of Section 10A the aforesaid discord can be reconciled by understanding the expression total income of the assessee in Section 10A as total income of the undertaking'. 68. We find, the CBDT in respect of similar relief u/s 84 of the Act has taken the view that the relief would be available for successors in F. No.15/5/63-IT(A-I), dated 13th December, 1963. Following the above instruction, the courts have allowed the deduction u/s 80J in the following cases:- 69. In view of the above and in view of the detailed reasoning given by the ld.CIT(A), we do not find any infirmity in his order allowing the claim of deduction u/s 10AA. 70. So far as the argument of the ld. CIT, DR that the order of the Hon ble Delhi High Court in approving the composite scheme of arrangement for merger and demerger is dated 30th April, 2012 and, therefore, it is applicable for A.Y. 2013-14 (onwards and not for A.Y. 2012-13 is concerned) which the ld.CIT(A) has not answered is concerned, the same, in our opinion, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gamation takes effect on and from the date of the order sanctioning the scheme. We are, therefore, of the opinion that the notices issued by the Income Tax Officer (impugned in the writ petition) were not warranted in law. The business carried on by the Transferor Company (Subsidiary Company) should be deemed to have been carried on for and on behalf of the Transferee Company. This is the necessary and the logical consequence of the court sanctioning the scheme of amalgamation as presented to it. The order of the Court sanctioning the scheme, the filing of the certified copies of the orders of the court before the Registrar of Companies, the allotment or shares etc. may have all taken place subsequent to the date of amalgamation/transfer, yet the date of amalgamation in the circumstances of this case would be January 1, 1982. This is also the ratio of the decision of the Privy Council in Raghubar Dayal v. The Bank of Upper India Ltd. [A.I.R.1919 P.C.9]. Counsel for the Revenue contended that if the aforesaid view is adopted when several complications will ensue in case the Court refuses to sanction the scheme of amalgamation. We do not see any basis for this apprehension. Fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction u/s 10AA was allowed by the AO in the order passed u/s 143(3) for A.Y. 2012-13, therefore, we are of the opinion that the issue cannot be examined in the instant year. In any case, we have otherwise held that the eligibility of units has to be seen in the year of formation of unit and once eligibility in the year of formation has not been denied or disputed, the claim is valid claim particularly when such claim has also been allowed in preceding/succeeding years. 73. So far as the argument relating to quantum of deduction on the ground that there is variation in the ratio of employee expenses to revenue under each of the unit is concerned, we are of the considered opinion that once the AO has accepted separate audited books of account maintained by the assessee company for each of the unit which are also supported by audit report, the quantum of deduction can never be separately disputed. We find the assessee itself has computed the business income for each of the unit independently the details of which are already given in the preceding para. Once separate books of accounts maintained have been accepted, the quantum of the claim cannot be tinkered on surmises and conj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant material on record. As has been pointed out on behalf of the assessee-company before the authorities below as well as before us, unit 1 was its publishing house whereas units 3 and 4 were its printing houses. The nature of business of unit 1 and unit 4 of the assessee, thus, was entirely different and there was no justifiable reason to compare the profit margin of the said units. Moreover, separate books of account were maintained by the assessee-company in respect of unit 4 and no material or specific defects were pointed out by the AO in the said books, which were duly produced before him for verification during the course of assessment proceedings. As noted in the order of the AO as well as in the order of the learned CIT(A), the printing work was being done by unit 4 of the assessee-company for unit 1 at fixed rates and the claim of the assessee that the said rates were even lower than the market rates was not rebutted/refuted by the AO by bringing any material on record. As rightly contended by the learned Counsel for the assessee before us, the expenditure on marketing and distribution of the publications was entirely required to be done for the business of publish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Z unit is concerned, we find the assessee has furnished unit-wise computation of deduction under section 10AA out of the four eligible units, only in respect of Noida SEZ and Coimbatore SEZ, the assessee has added back expenses of ₹ 19,14,995/- and ₹ 3 lakhs respectively. The above figure represents expenses which were added back while computing the unit-wise computation for determining the profit eligible for deduction under section 10AA of the Act. Therefore, once the expenditure has been added back which claim has also been accepted by the AO in the order of assessment, then, this, in our opinion, becomes a non-issue. In our opinion, the allegation of the AO that the entire expenses have not been added back and it is a clear admission on the part of the assessee that resources of non-SEZ units have been used for earning of revenue in SEZ units is concerned, this also, in our opinion, is a vague finding without any basis. Mere add back of certain expenses from eligible profits of eligible unit which is accepted in the order of assessment cannot be a basis to assume that the resources of non-SEZ units have been used for earning the revenue in SEZ units. So far as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of profit of four SEZ undertakings which are as under:- NOIDA SEZ Nagpur SEZ Total 80,90,791 1,97,308 82,88,099 81. He observed from Note No.23 of the P L account that the other income includes interest on bank deposit and other income. According to the AO this income of ₹ 82,88,099/- cannot be considered as profits and gains derived from export of article/things from services as necessitated in section 10AA. He, therefore, excluded this income from the profits of undertakings for computation of eligible profits of the eligible undertakings and made addition of the same to the total income of the assessee. 82. Before the CIT(A) it was submitted that identical deduction under section 10AA of the Act was claimed on the interest of ₹ 1,40,67,685/- in the assessment year 2012-13 and the same was allowed by the AO in the assessment order framed under section 143(3) of the Act. Therefore, following the rule of consistency itself, no disallowance is called for. The decision of the Hon ble Supreme Court in the case of CIT vs Excel industries Ltd., 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii)CIT vs. Chinna Nachimuthu Constructions,297 ITR 70 (Kar); iv) Satishchandra Co. vs. CIT, 234 ITR 70 (Kar): and v) M/s Green Agro Pack P. Ltd. vs. CIT, ITA No.3112 of 2010 (Kar.). 87. Referring to the decision of the Hon ble Calcutta High Court in the case of CIT vs Tirupati Woolen Mills Ltd., 193 ITR 252, he submitted that the Hon ble High Court has held that interest earned on deposits made with banks is taxable as business income and not under the head other sources as investments are made by utilisation of commercial assets of the assesseee. For the proposition that interest income from FD for obtaining credit facility falls under the head profits and gains of business and profession and is eligible for deduction under section 10AA of the Act, the ld. counsel relied on the following judicial precedents:- i) Livingstones Jewellery Pvt. Ltd. vs. DCIT, 31 SOT 323 (Mum); ii) M/s Rajesh Exports Ltd. vs. ACIT, 2008-TIOL-457, ITAT Bangalore; iii) Discover India Tours (P) Ltd. vs. AO, 9 SOT 665. 88. He also relied on the following decisions:- i) 48 taxmann.com 153 (Ahd) Zaveri Co. (P) Ltd. v. CCIT ii) ITA No. 1650/Mum/2015 M/s Ossian Exports Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmula. The issue becomes further clear when we look into the provisions of s. 80HHC which are similar, as far as the education (sic) of deduction is concerned. As the legislature wanted to specifically exclude receipts by way of brokerage, commission, rent, charges or any other receipt of similar nature, from the profits of the business, in s. 80HHC, it has specifically inserted Expln. (baa). If the legislature intended to exclude interest from the term profit of business of undertakings under s. 10A/10B, a similar provision as in the case of Expln, (baa) would have been inserted. No such Explanation has been introduced in s. 10A/10B. 91. We find, following the above decision the ld. CIT (A) has held that in the absence of the use of the term derived from in section 10AA (7) of the Act, no nexus is required for the computation of deduction between the profits in question and the undertaking. It is sufficient if the profits relate to the business of the undertaking. We find the Bangalore Bench of the Tribunal in the case of Wipro Information Technology vs DCIT, ITA No.651/Bang/94 for assessment year 1990- 91 after discussing the difference between the provisions of 10A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereto and the profits flowing therefrom. The act of securing a letter of credit facility for imports with fixed deposits will be an activity incidental and connected with export business of assessee. Any income there from, including interest income will constitute profits of the business of the undertaking. 92. We find Ahmedabad Bench of the Tribunal in the case of Zaveri Co. (P) Ltd. vs. CCIT, 48 taxmann.com 153 (Ahd) has observed as under:- 41. The other connected issue is that as per the view of the Commissioner of Income Tax, the interest income in question being derived by the assessee from Indian Bank, the same is to be excluded while computing profits derived from the export of articles or things or services for the purpose of section 10AA of the Act. Sub-section (7) of section 10AA provides the manner in which the profits derived from export of articles or things or services is to be computed for the purposes of section 10AA of the Act. Therefore, in view of the above specific provision in the section itself, profits derived from the export of articles or things or services cannot be computed in any other manner. Sub-section (7) of Section 1GAA reads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that para 14 of the notes to accounts read as under:- The Company acquired business of Planet Soft India Pvt. Limited for a consideration of ₹ 385 Millions (USD 7 Million). TRC Corporate Consulting Pvt. Ltd. has conducted the Fair Value of the business of Planet Soft at ₹ 409 Millions. It will provide Ebix entry into fast growing Insurance Industry in India. Along with the business, it took over essential tangible assets and liablities which were essential and related to the ongoing concern business. The net fair value of these assets is determined by TRC Corporate Consulting Pvt. Ltd. at ₹ 11.29 Millions. The Company had recognized in its books Goodwill on this acquisition at ₹ 374,052,401 Millions being the excess of purchase consideration over the tangible assets of the business. Besides, the tangible block it also took over the entire workforce (key drive of the business) of the business which comprise of over 400 qualified personnel's. The company has reinstated the acquired specified fixed assets of above name company on the original value as stated in financial statements as on 31.05.2012. The resultant effect due to this reins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of facts and law. The finding of the AO that excess of purchase money over tangible assets of the business is in fact the payment of non- compete fee as there was no goodwill with the seller and the creation of goodwill in the books is misleading was factually incorrect and based on incorrect facts on record. The decision of the Hon ble Supreme Court in the case of CIT vs Smifs Securities Ltd., 348 ITR 302 was brought to the notice of the CIT(A) wherein the Hon ble Supreme Court has held that excess consideration paid by the assessee over the value of the net assets acquired of amalgamating company and considered as goodwill arising on amalgamation was in fact paid towards reputation which the amalgamating company was enjoying in order to retain its existing clientele. It was, thus, held that such goodwill is an eligible intangible asset for depreciation. Various other decisions were also brought to the notice of the CIT(A). 101. Based on the arguments advanced by the assessee, the ld CIT(A) directed the AO to allow depreciation of ₹ 8,40,46,029/-. The relevant observation of the CIT(A) read as under:- The Assessing Officer has held that the cost of the purchase consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld show that in the said case, non compete fee has been paid for a period of seven years which was held to be enduring benefit and therefore, such expenditure has been held to be capital expenditure. It is submitted that in the said case, the appellant thereafter, made an alternative contention that the expenditure be held to be intangible assets, eligible for depreciation under section 32 of the Act. The Hon'ble Apex Court after considering the judgment in the case of Techno Shares and Stock Brokers (P) Ltd. (supra) and the judgment in the case of Hindustan Cola Beverages (supra) held that there is no acquisition of non competition agreement, it is restricted one and 'therefore, such a sum is not eligible for the capital assets under section 32(1) of the Act. It was held that expression 'similar business of commercial rights' has to be necessarily result in an intangible asset against the entire world to be eligible for the deprecation. The said judgment has no application on the facts of the instant case more particularly when there is no independent agreement and there is no specified consideration for noncompete fee having been paid by the company. It is well s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment for non compete fee as claimed by the Assessing Officer. The judgment relied by the Assessing Officer to deny the eligible deduction of depreciation on the goodwill has been given in the different context and has no connection with the facts of the given case In view of the above, the Assessing Officer is directed to allow the depreciation of ₹ 8,40,26,029/- and modify the order of assessment accordingly 102. Aggrieved with such order of the CIT(A) the revenue is in appeal before us. 103. The Ld. DR strongly supported the order of the AO and submitted that the findings of the CIT(A) is perfunctory and does not distinguish the decision in the case of Sharp Business System, ITA no. 492/2012 and CM Appeal 14836/2012 and CIT vs Hindustan Coco Cola Beverages (P) Ltd.,331 ITR 192 (Delhi). He submitted that the decision of the Hon ble Supreme Court in the case of Smifs Securities Ltd. (supra) which has been relied on by the assessee is not applicable to the facts of the present case since, in that case, the agreement specifically contains an article of non-compete fee. Thus, the assessee cannot take the stand that the purchase consideration in excess of tangible assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the agreement with M/s Planet Online Private Ltd. are in respect of goodwill and not in respect of non-compete fee. He submitted that non-compete fee was an incidental obligation of M/s Planet Online Pvt. Ltd. and there was no separate consideration paid towards noncompete fees. He submitted that as per various judicial precedents it has been consistently recognised and held that any sum paid over and above the book value is to be held as exclusive unless there is an agreement to the contrary and, thus, in absence of an agreement to the contrary in any manner holding that the sum is paid towards non-compete fee is absolutely misplaced and untenable. 106. So far as the decision relied on by the AO in the case of Sharp Business System vs. CIT, 254 CTR 233 is concerned the Ld. counsel submitted that this decision has no application to the facts of the case of the assessee. In the said case, the expenditure had been incurred of ₹ 3 lacs towards non-compete fee and the same was claimed as revenue expenditure and under the facts of that case it was held to be a capital expenditure. However, no such expenditure has been claimed by the assessee company. Further, in that case, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness transfer agreement shows that the preamble of the agreement read as under:- BUSINESS TRANSFER AGREEMENT This BUSINESS TRANSFER AGREEMENT ( Agreement ) dated 1 st June 2012 is made by and between Ebix Software India Private Limited. ( Purchaser ) with its Registered Office at 311, B 4 A Pariytan Vihar, Vasundhara Enclave Delhi 110096, and PlanetOnline Private Limited with its Registered Office at 604 / 605, 6th floor, Ashoka Bhoopal Chambers, SP Road,, Secunderabad, 500 003 ( Seller , which expression includes its Subsidiaries). Recitals A. Seller is an software provider registered in India which is inter alia, engaged in offering software services/solutions to business to business (B2B), e-commerce and website development for the insurance industry worldwide. B. Purchaser is a company, having a wide repertoire of information technology services including but not limited to computer programming, software/development/ customization/ installation/maintenance with expertise in the provision of insurance software. C. Purchaser desires to acquire from Seller and Seller desires to sell and transfer to the Purchaser, the Business as an undertaking, together with al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The term Assets means all tangible and intangible assets, properties, and rights used by the Seller to carry out the Business as specifically reflected in the list of Assets as set out in Exhibit 1 hereto. Seller shall deliver to the Purchaser such bills of sale, assignments, endorsements, and other recordable instruments of assignment, transfer, conveyance, in respect of the above Assets, in form and substance reasonably satisfactory to Purchaser and its counsel, as shall be effective to vest in the Purchaser all of the right, title and interest of Seller in and to the Assets free and clear of all Liens. 2.4 Liabilities. The term Liabilities means all liabilities and obligations of the Seller as of the Transfer Date arising out of the Business. Without limiting the generality of the foregoing, it is expressly understood that the Liabilities shall exclude the following liabilities and obligations; (a) All liabilities and obligations incurred by the Seller in connection with the conduct of its businesses other than the Business; (b) All liabilities as of Transfer Date, in excess of ₹ 1,00,000/- (Rupees One Lakh only), reasonably known to the Seller and not dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in competition with the Business. 109. From the above it is seen that Planet Online Private Limited has transferred to the purchaser, i.e., the assessee company its business undertaking as a going concern, as a slump sale that is to say, of all the assets, transferred employees, liabilities, licenses, contracts and receivables as defined in definition schedule relating to the business, free and clear of all liens, mortgages, pledges, security interests, restrictions, prior assignments, encumbrances and claims of every kind, nature or character. It has further been stated that as sole and entire consideration for the purchase of a business undertaking, purchaser shall pay to the seller purchase price equivalent to US dollars 7 million on and subject to the terms of Article III hereinabove. The expression assets, liabilities, contracts, receivables have been separately defined. Thus, apparently from the reading of both Article II and III it is seen that there is no reference of payment of purchase price being paid for non-compete fees. On the contrary, the entire purchase price has been paid for purchase of the business undertaking and undertaking has been defined to include asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ble Supreme Court reads as under:- 1. None appears for the respondent, though served. Heard learned counsel for the Department. Leave granted. This civil appeal concerns the Assessment Year 2003-2004. Three questions arise for determination by this Court. They are as follows: Question No.[a]: Whether Stock Exchange Membership Cards are assets eligible for depreciation under Section 32 of the Income Tax Act, 1961? Whether, on the facts and in the circumstances of the case, deletion of ₹ 53,84,766/- has been made correctly? Answer: Learned Additional Solicitor General fairly concedes that the said question is covered by the decision of this Court in the case of Techno Shares and Stocks Limited vs. Commissioner of Income Tax, reported in [2010] 327 I.T.R. 323, in favour of the assessee. Question No.[b]: Whether goodwill is an asset within the meaning of Section 32 of the Income Tax Act, 1961, and whether depreciation on 'goodwill' is allowable under the said Section? Answer: In the present case, the assessee had claimed deduction of ₹ 54.85,430/- as depreciation on goodwill. In the course of hearing, the explanation regarding origin of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax (Appeals) (CIT(A)', for short has come to the conclusion that the authorised representatives had filed copies of the Orders of the High Court ordering amalgamation of the above two Companies: that the assets and liabilities of M/s. YSN Shares and Securities Private Limited were transferred to the assessee for a consideration; that the difference between the cost of an asset and the amount paid constituted goodwill and that the assessee-Company in the process of amalgamation had acquired a capital right in the form of goodwill because of which the market worth of the assessee- Company stood increased. This finding has also been upheld by Income Tax Appellate Tribunal ITAT', for short. We see no reason to interfere with the factual finding. 7. One more aspect which needs to be mentioned is that, against the decision of 1TAT, the Revenue had preferred an appeal to the High Court in which it had raised only the question as to whether goodwill is an asset under Section 32 of the Act. In the circumstances, before the High Court, the Revenue did not file an appeal on the finding of fact referred to hereinabove. 8. For the afore-stated reasons, we answer Questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at case, expenditure had been incurred of ₹ 3 crores towards noncompete fee and the same was claimed as revenue expenditure which on the facts of that case was held to be capital expenditure. In that case, the assessee also made an alternate contention that the expenditure be held to be intangible assets, eligible for depreciation under Section 32 of the IT Act. The Hon ble High Court after considering the judgement of the Hon ble Supreme Court in the case of Techno Shares and Stocks Ltd. vs.CIT, 327 ITR 323 and the judgement in the case of Hindustan Coca-Cola Beverages Ltd. 331 ITR 192 held that non-compete fee is not eligible Capital Asset under Section 32(1) of the Act. However, since no expenditure has been incurred by the assessee company as non-compete fee, this decision is not applicable to the facts of the present case and distinguishable. In this view of the matter and in view of the detailed reasoning given by the ld. CIT(A) on this issue, we do not find any infirmity in the order of the CIT(A). Accordingly, the ground raised by the Revenue is dismissed. ITA No.5275/Del/2017 (A.Y. 2014-15) 114. Ground of appeal No.1 by the Revenue reads as under:- 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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