The Income Tax Appellate Tribunal (ITAT), Mumbai allowed depreciation under Section 32 of the Income Tax Act on already paid non-compete fees thereby granting relief to Abbott Healthcare Private Limited.
The assessee, Abbott Healthcare Private Limitedis in the second round before the Tribunal. This appeal of the assessee along with a Cross-Appeal by the Revenue for the same assessment year was decided by the Tribunal vide order dated 06/01/2020. Thereafter, the assessee filed a Miscellaneous Application under Section 254(2) of the Income Tax Act, 1961 seeking rectification in the order of the Tribunal.
The Co-ordinate Bench disposed of the said Miscellaneous Application by observing that “additional ground was not adjudicated by the ITAT as there was no discussion on the subject. However, since the assessee has submitted a photocopy of the ITAT receipt for filing additional ground in the interest of justice, we deem it appropriate that the case be recalled only to consider the veracity and adjudication of the said additional ground raised by the assessee.”
Hence the assessee raised additional grounds of appeal in respect of depreciation on the Non-Compete Fee under Section 32 of the Act.
Raghavendra Singh appearing on behalf of the assessee submitted that the issue raised in additional grounds of appeal does not require any additional evidence to be placed on record. It is a legal issue, hence, can be decided on the basis of documents and material already available on record.
The Counsel further submitted that the assessee initially did not raise any ground on the issue of the Non-compete Fee before the Tribunal as the assessee had gotten relief on the alternate plea to treat the Non-compete Fee paid as deferred revenue expenditure. Subsequently, the assessee by way of additional grounds of appeal claimed that depreciation is allowed to the assessee u/s.32 of the Act on Non-compete Fee.
The Bench consisting of Vikas Aswathy, Judicial Member, and Amarjit Singh, Accountant Member held that “In the present case payment of the non-compete fee in accordance with terms of the agreement between the assessee and Piramal Healthcare Ltd. is not disputed by the Revenue. Ergo, in light of the facts of case and the decision by Hon’ble Bombay High Court referred above, we hold that the assessee is eligible for depreciation u/s. 32 of the Act on Non-compete Fees paid being an intangible asset.”
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