Metro Tyres Limited Vs ACIT (ITAT Delhi)
ITAT Delhi held that penalty u/s 271(1)(c) of the Income Tax Act unsustainable as allowability of deprecation on non-compete fee is highly contentious as different views are taken by various High Courts and matter is pending before Supreme Court.
Facts- The assessment order came to be passed against the assessee by making disallowance on account of depreciation claimed on non compete fee of Rs. 21,89,970/- and disallowance u/s 14A of the Act of Rs. 7,37,674/-. In the quantum Appeal, CIT(A) deleted the disallowance made u/s 14A of the Act and sustained the disallowance of Rs. 21,89,974/- claimed as depreciation on non compete fee.
The penalty proceedings have been initiated against the assessee and an order of penalty came to be passed u/s 271(1)(c) of the Act. CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed by the assessee.
Conclusion- Held that there are different views by the Jurisdictional High Court and other High Courts on the issue of allowability of claim of the depreciation on non compete fees which is highly contentious and the lis is pending before the Hon’ble Supreme Court. Therefore, in our considered opinion, the provisions of Section 271(1)(c) cannot be attracted against the Assessee.
