Case Law Details
Fortis Hospitals LTD. Vs ACIT (Delhi High Court)
The appellant had entered into a Business Transfer Agreement with Wockhardt Hospitals Ltd. on 24.08 .2009, for acquiring a business division of Wockhardt Hospitals Ltd. consisting of ten hospitals situated in the cities of Bangalore, Kolkata and geographical limits of Eastern Mumbai. The appellant claims to have also paid non-compete fee of ₹15.50 crores to Wockhardt Hospitals Ltd. for not directly or indirectly carrying on the business of hospital and related services for a period of three years in the cities of Bangalore, Kolkata and geographical limits of Eastern Mumbai. The said non-compete fee is claimed to have been capitalized by the appellant in its books of accounts.
It is clear from the order of the assessment made by the Assessing Officer that the amount of non compete fee of Rs. 15.50 crore has been capitalized in the books of accounts. The appellant has claimed the depreciation of Rs. 1,48,63,000/- treating the payment of the non compete fee as intangible asset.
The learned ITAT, placing reliance on the judgment of this Court in Sharp Business System Income-tax – III, 2012 SCC OnLine Del 5639: 211 Taxman 576 (Delhi), has held that the non-compete fee cannot be termed as ‘intangible asset’ and therefore, depreciation claimed on the same could not be allowed.
Though an appeal against the Sharp Business System is claimed to be admitted by the Supreme Court, it is not claimed by the appellant that the operation of the judgment was also stayed by the Supreme Court. We, therefore, presently are bound to follow the same and see no reason to disagree with the same. Merely because another appeal raising similar questions has been admitted by this Court, also does not persuade us to admit the present appeal as well only on this ground.
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