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TMI Blog2022 (11) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... lternative claim of allowing the non-compete fee as deferred revenue expenditure. We allow the cross objections filed by the assessee in all the three years under consideration and hold that the assessee is eligible for depreciation on non-compete fee, as the same would fall under the category of intangible asset. We order accordingly. Hence the decision rendered by Ld CIT(A) in all the three years are reversed. Even though the decision rendered by the Ld CIT(A) has been reversed, since the cross objections filed by the assessee are allowed, the appeals filed by the revenue are also liable to be rejected as infructuous. Treatment of foreign exchange loss arising on account of revaluation of amount payable in respect of acquisition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issues are involved, all these appeals were heard together and are being disposed of by this common order, for the sake of convenience. 2. The assessee is engaged in the business of manufacture and trading of pharmaceuticals, nutritional, dianostic and vascular products. 3. The only issue urged by the revenue in all the three years relate to the direction of Ld CIT(A) to treat non-compete fees as deferred revenue expenditure. 4. The facts relating to this issue are that the assessee had acquired the Base Domestic Formulations business from M/s Piramal Healthcare Limited, vide Business Transfer Agreement dated 21st May 2010 on slump sale basis. The consideration paid by the assessee consisted of non-compete fees of Rs.513,54, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement is valid. We notice that the assessee had raised an additional ground in its appeal in ITA No.570/Mum/2018 claiming depreciation on the non-compete fee. Though the Tribunal had adjudicated the appeal of the assessee, vide its order dated 06-01-2020, it inadvertently omitted to adjudicate the additional ground raised by the assessee. Hence the Tribunal, vide its order 08-03-2021 passed in M A No.229/Mum/2020, recalled its order for the limited purpose of adjudicating the additional ground raised by the assessee. Subsequently, the Tribunal adjudicated the above said additional ground, vide its order dated 02-08-2022, wherein the Tribunal allowed the claim of depreciation by observing as under:- 12. In the present case payment of no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the alternative claim. He submitted that the Tribunal has allowed the claim of depreciation in the appeal filed by the assessee in AY 2011-12, vide its order dated 02-08- 2022. He also submitted that the Tribunal has given two different decisions on the very same view. However, he submitted that, if the original claim of depreciation is allowed, then there was no necessity to consider alternative claim. The confusion has occurred only because the Tribunal had omitted to adjudicate the addition ground relating to claim of depreciation. Accordingly he submitted that the assessee s claim of depreciation may be allowed and in that case, the question of allowing deduction as deferred revenue expenditure will not arise. 10. We notice that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Domestic Formulations Business from M/s Piramal Healthcare Ltd. The total purchase price was US$ 3.8 billion, of which rupee equivalent of US$ 2.20 billion was paid by the assessee at the conclusion of transaction. The remaining amount of consideration was agreed to be paid in rupee equivalent of four installments of US$ 400 million beginning in 2011. At the end of each financial year, the assessee revalued the amount payable to M/s Piramal Healthcare Ltd. 12. In AY 2011-12, the revaluation resulted in foreign exchange gain. The AO applied the provisions of sec.43A of the Act and accordingly reduced the amount of foreign exchange gain from the value of assets, which resulted in corresponding reduction of depreciation. During the years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to understand as to how the assessee could press upon the Principle of Consistency, when it has not accepted the decision taken by AO in AY 2011-12. We notice that both the AO and the assessee has taken stands to suit their convenience in each of the years. Be that as it may, we notice that this issue has been examined by the co-ordinate bench in AY 2011-12 and this issue has been restored back to the file of Ld CIT(A) with the following observations:- 28. From the above we note that the above provision is special provision consequential to change in rate of exchange of currency. Learned CIT(A) has only referred to aspect that under section 43A its applicability depend upon the satisfaction of the criteria that the asset was acquired ..... X X X X Extracts X X X X X X X X Extracts X X X X
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