Beacon Higher Education Services Pvt Ltd Vs ACIT (ITAT Delhi)
ITAT Delhi held that issue relating to allowance of depreciation on non-compete fee is debatable and it is well settled law that rectification provision u/s. 154 of the Income Tax Act cannot be invoked if the issue is debatable.
Facts- The assessee, a company, filed its return of income at NIL after setting off of the brought forward losses of Rs. 4,29,60,688/-under normal provisions of the Income-tax Act, 1961 and book profit of Rs. 57,22,914/- u/s 115JB of the Act.
The case was taken up for scrutiny and the assessment was completed u/s 143(3) of the Act on 30.10.2018 at an income of Rs. 7,15,68,060/- after setting off the brought forward losses of Rs. 5,24,34,375/-. Thereafter AO noticed that in the assessment order as per the previous year’s order, no further losses of previous years were available for set off during AY 2014-15. The assessee had entered into ‘Service Continuation Agreement’ in May 2011 and ‘non-compete agreement’ in June, 2011 and claimed depreciation of Rs. 1,20,93,750/- @ 25% as ‘non-compete agreement’. Since neither of the two agreements qualified for depreciation as intangible assets, rectification notice u/s 154 of the Act was issued to the assessee for rectifying the mistake. AO after considering the submissions of the assessee rejected the claim and thus made addition of Rs. 1,20,93,150/-.
