Depreciation allowable on non-compete fee (intangible asset)

Piramal Glass Ltd. Vs DCIT (ITAT Mumbai)

The issue before us is, whether assessee’s claim of depreciation on non–compete fee @ 25% by treating it as an intangible asset is acceptable or not. As could be seen, this is a recurring dispute between the parties since the assessment year 1999–2000. Though, while deciding the issue in the assessment year 1999–2000, vide ITA no.4842/Mum./2004, dated 5^th April 2013, the Tribunal has disallowed assessee’s claim of depreciation on non–compete fee by treating it as an intangible asset, however, while deciding assessee’s appeal in assessment year 2001–02 in ITA no. 9645/Mum./2004, dated 2^nd March 2016, the Tribunal though was conscious of its own contrary decision in assessment year 1999–2000, however, taking note of the decisions of Hon’ble Madras High Court and Hon’ble Karnataka High Court, referred to above, allowed assessee’s claim of depreciation by treating the non– compete fee as an intangible asset. The same view was reiterated by the Tribunal while deciding assessee’s appeal for the assessment year 2006–07 in ITA no.5360/ Mum./2010, dated 16^th December 2016, and in assessment year 2011–12 in ITA no.157/Mum./2011, dated 4^th January 2007. Therefore, facts being identical, following the consistent view of the Tribunal in the orders referred to above, as well as the decision of different High Courts cited supra, we uphold the decision of the learned Commissioner (Appeals) on the issue.

FULL TEXT OF THE ITAT JUDGEMENT

Aforesaid appeal has been filed by the assessee challenging the final assessment order dated 27^th February 2017, passed under section 143(3) r/w section 144C(13) of the Income Tax Act, 1961 (for short “the Act”) for the assessment year 2012–13, pursuant to the directions of the Dispute Resolution Panel–2 (DRP), Mumbai.

2. Grounds no.(i), (ii) and (iii), are without prejudice to each other. However, they are on the issue of deduction / depreciation claimed on non–compete fee.

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