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TMI Blog2021 (10) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure. The Assessing Officer held that the amount paid was in the nature of capital expenditure and passed order under Section 143 (3) of the Income Tax Act, 1961 (the Act) adding this amount of Rs. 4,73,00,000/- to the total income of respondent. 2. Aggrieved by this order respondent preferred an appeal to CIT (A). CIT (A) agreed that the payment of non-compete fee was on account of business necessity so as to prevent the directors of Medtech Devices Ltd., from starting an alternative company on their own. But agreed with the Assessing Officer that the expenditure made towards non-compete fee was capital in nature. Respondent impugned this order of CIT (A) before the Income Tax Appellate Tribunal (ITAT). The ITAT partly allowed the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act' for short) was available. 4. We however notice that similar issue has been considered by the different High Courts and held in favour of the Assessee. A reference can be made to the decision of the Division Bench of the Gujarat High Court in the case of Principal Commissioner of Income Tax v. Ferromatice Milacron India (P.) Limited (2018) 99 taxmann.com 154 (Gujarat). It was also the case where the Assessee had incurred expenditure pursuant to the non-compete agreement and claimed depreciation on such asset. While dismissing the Revenue's Appeal against the Judgment of the Tribunal, following observations were made : "We may recall the Assessing Officer does not dispute that the expenditure was capital in nature since by ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted (supra) Division Bench of Delhi High Court had an occasion to interpret the meaning of intangible assets in context of section 32(1)(ii) of the Act. It was observed that on perusal of the meaning of the categories of specific intangible assets referred to in section 32(1)(ii) of the Act preceding the term "business or commercial rights of similar nature" it is seen that intangible assets are not of the same kind and are clearly distinct from one another. The legislature thus did not intend to provide for depreciation only in respect of the specified intangible assets but also to other categories of intangible assets which may not be possible to exhaustively enumerate. It was concluded that the assessee who had acquired commercial righ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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