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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 ..... ee under the said agreement not only give enduring benefit, protected the assessee's business against competence, that too from a person who had closely worked with the assessee in the same business. The expression or any other business or commercial rights of similar nature used in Explanation 3 to subsection 32(1)(ii) is wide enough to include the present situation - Decided in favour of assessee. - INCOME TAX APPEAL NO. 1453 OF 2017 - - - Dated:- 30-9-2021 - K.R. SHRIRAM R.I. CHAGLA, JJ. Mr. Akhileshwar Sharma for Appellant. Mr. Nishant Thakkar a/w Mr. Hiten Chande i/b PDS Legal for Respondent. P.C. : 1. Respondent is engaged in manufacturing and trading of life saving devices. For the assessment year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. Whether non-compete fees is an intangible asset of any other business or commercial rights of similar nature as per section 32 (1) (ii) of Income Tax Act, 1961? ii. Whether non-compete fees is an intangible asset as per section 32 (1) (ii) of Income Tax Act, 1961? 3. This issue is no more res-integra. The Division Bench of this Court in Income Tax Appeal No. 556 of 2017, Pr. Commissioner of Income Tax 7 Vs. Piramal Glass Limited, Order dated 11th June, 2019 has held that the payment of non-compete fee would fall under the expression or any other business or commercial rights of similar nature used in explanation 3 to Sub Section 32 (1) (ii) of the Act. Paragraph No.3, 4 and 5 in the said order reads as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l rights of similar nature. In the opinion of the Assessing Officer, the non-compete fee would not satisfy this discrimination. Going by his opinion, no matter what the rights acquired by the assessee through such non-compete agreement, the same would never qualify for depreciation in section 32(1)(ii) of the Act as being depreciable intangible asset. This view was plainly opposed to the well settled principles. In case of Techno Shares Stocks Limited (supra) the Supreme Court held that payment for acquiring membership card of Bombay Stock Exchange was intangible assets on which the depreciation can be claimed. It was observed that the right of such membership included right of nomination as a license which was one of the items which woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not solicit directly or indirectly any employee of the assessee. He would not disclose any confidential information which would include the past and current plan, operation of the existing business, trade secretes lists etc. It can thus be seen that the rights acquired by the assessee under the said agreement not only give enduring benefit, protected the assessee's business against competence, that too from a person who had closely worked with the assessee in the same business. The expression or any other business or commercial rights of similar nature used in Explanation 3 to subsection 32(1)(ii) is wide enough to include the present situation. 5. No question of law in this respect therefore arises. 4. In our view, the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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