M/S AB MAURI INDIA PRIVATE LIMITED,BENGULURU vs. THE JOINT COMMISSIONER OF INCOME TAX(OSD) CORPORATE CIRCLE-1(1), CHENNAI

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ITTPA 10/CHNY/2021Status: DisposedITAT Chennai01 February 2023AY 2006-073 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the issue of depreciation on non-compete fees has been decided in favor of the assessee in all earlier assessment years by the Tribunal. Furthermore, the revenue's appeals against these decisions have already been dismissed by the Hon'ble High Court of Madras vide orders dated 25.02.2021 due to low tax effect. The Tribunal noted that copies of these High Court decisions were placed on record, confirming that the issue has attained finality in the assessee's favor. Consequently, the Tribunal directed the Ld. AO to allow the depreciation as claimed by the assessee. No issue was expressly left undecided.

What were the facts?

The assessee, M/s. AB Mauri India Pvt. Ltd., is in appeal before the Income Tax Appellate Tribunal (ITAT), Chennai, against the order of the Joint Commissioner of Income Tax (JCIT) for Assessment Year 2006-07. The appeal was filed with a delay of 156 days, which the Tribunal condoned due to the Covid-19 pandemic. The core issue is the disallowance of depreciation on non-compete fees, which the assessee had capitalized as an intangible asset. The Assessing Officer (AO) disallowed the claim, and the Dispute Resolution Panel (DRP) upheld this, stating that the Tribunal's favorable orders for earlier years were under challenge before the Madras High Court and thus sub-judice. The assessee is aggrieved by the DRP's decision.

What were the issues?

1. Whether the assessee is entitled to claim depreciation on non-compete fees as an intangible asset for Assessment Year 2006-07, attracting Section 32 of the Income Tax Act, 1961. Assessee's Contention: The assessee argued that the issue is covered in its favor for several preceding assessment years by the ITAT's decisions, copies of which were provided. The assessee had paid non-compete fees in AY 2001-02 and capitalized them, claiming depreciation as an intangible asset. Revenue's Contention: The revenue, through the Ld. DR, did not controvert the assessee's submission regarding the ITAT's prior favorable decisions. However, the DRP had previously rejected the assessee's plea by stating that the Tribunal's orders were not accepted and were under challenge before the Hon'ble High Court of Madras, rendering the issue sub-judice.

Which sections of the Income-tax Act were involved?

Section 32

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI

Before: HON’BLE SHRI MAHAVIR SINGH & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

Manoj Kumar Aggarwal (Accountant Member)

1.

The sole grievance of the assessee in the captioned appeal is disallowance of depreciation on non-compete fees. The registry has noted a delay of 156 days in the appeal. Considering the fact that the impugned order was passed during lockdown situation arising out of Covid-19 Pandemic, we condone the delay and admit the appeal for adjudication on merits.

2.

The ld. AR, at the outset, submitted that the issue is covered in assessee’s favor for several years by the decision of this Tribunal. The copies of the orders have been placed on record. The said submission could not be controverted by revenue.

3.

The assessee paid certain non-compete fees during AY 2001-02 and capitalized the same in the books of accounts. Consequently, the assessee claimed depreciation on the same treating the same as an intangible asset. The Ld. AO disallowed the same which was objected to by the assessee before Ld. DRP wherein the assessee referred to favorable decision of this Tribunal for AYs 2001-02, 2003-04 and 2005-

06.

However Ld. DRP did not accept the plea on the ground that the orders of Tribunal were not accepted and the same were under challenge before Hon’ble High Court of Madras and the issue was sub- judice. Aggrieved, the assessee is in further appeal before us.

4.

From the facts, it is quite clear that the issue has been decided by Tribunal in all the earlier years in assessee’s favor. The revenue’s appeal against the same has already been dismissed by Hon’ble High Court of Madras vide orders dated 25.02.2021 due to low tax effect. The copies of the decisions have been placed on record. Thus, this issue has attained finality in assessee’s favor. Considering the same, we direct Ld. AO to allow the depreciation as per claim made by the assessee.

5.

The appeal stand allowed. Order pronounced on 01st February, 2023. (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) उपा23 /VICE PRESIDENT लेखा सद; / ACCOUNTANT MEMBER चे*ई / Chennai; िदनांक / Dated : 01-02-2023 EDN/- आदेश की Wितिलिप अ8ेिषत/Copy of the Order forwarded to : 1. अपीलाथ"/Appellant 2. ""यथ"/Respondent 3. आयकर आयु" (अपील)/CIT(A) 4. आयकर आयु"/CIT 5. िवभागीय "ितिनिध/DR 6. गाड" फाईल/GF

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