Depreciation cannot be claimed on non-compete fee as it cannot be termed as intangible asset

ACIT Vs Fortis Hospitals Ltd. (ITAT Delhi)

Non compete fee did not confer any exclusive right to carry-on the primary business activity. The right is restricted only to the particular party or individual and does not have the exclusivity over the rest of the world. Thus, non-compete fee cannot be termed as intangible asset. The Hon’ble High Court has also set out the differences between the rights conferred by goodwill and rights acquired by the non compete agreement. Therefore, the ratio of the decision of the Hon’ble Delhi High Court in case of Sharp Business System is applicable in the present case and depreciation claimed on the said non compete fee cannot be allowed.

FULL TEXT OF THE ITAT JUDGEMENT

This appeal is filed against the order dated 07.02.2017 passed by CIT(A)-3, Delhi for assessment year 2010-11.

2. The Grounds of appeal are as under:

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