INCOME TAX ACT, 1961

Section 32(1)(ii)

Depreciation - Allowability - Payment of non-compete fees -

Assessee made payment of non-compete fees and claimed depreciation thereon. Revenue contended that this being an intangible asset, no depreciation would be allowable under section 32. Held: Rights acquired by the assessee under non-compete agreement not only give enduring benefit, protected the assessee's business against competence, that too from a person who had closely worked with the assessee in the same business. The expression “or any other business or commercial rights of similar nature” used in Explanation 3 to section 32(1)(ii) was wide enough to include payment of non-compete fees. Accordingly, assessee had rightly claimed depreciation.

REFERRED : Pr. CIT v. Ferromatic Milacron India Pvt. Ltd. (2018) 99 taxmann.com 154 (Guj) : 2018 TaxPub(DT) 6768 (Guj-HC)

FAVOUR : In assessee's favour.

A.Y. :

INCOME TAX ACT, 1961

Section 36(1)(iii)

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