Abbott Healthcare Private Limited 2011 12 vs. Principal Commissioner of Income tax 2,

Ordered accordingly.

Since the appeals/ cross-appeals before the ITATs have been revived, parties would be at liberty to raise additional ground(s) based on the present judgment.”

Thus, clearly in similar facts and circumstances, the Supreme Court has authoritatively held that the non-compete fee is an allowable revenue expenditure under Section 37(1) of the Act. In the present case, the Tribunal by the impugned order has confirmed the findings of the CIT(A) wherein has been directed the Assessing Officer to treat the non-compete fees as deferred revenue expenditure for a period of eight years.

Learned Counsel for the assessee has submitted that considering the authoritative decision rendered by the Supreme Court in Sharp Business System (supra), an Interim Application has been filed by the assessee to place on record such subsequent developments wherein the following prayers are made: “a) Allow the Applicant to bring on record the subsequent developments as stated above. b) Hold that the non-compete fee paid by the Applicant should be treated as revenue expenditure and the deduction for the same should be amortised over a period of eight years and, accordingly, dismiss the revenue’s appeal by confirming the original Tribunal order dated January 06, 2020. c) Such other and further relief may be granted as this Hon’ble Court may deem fit and proper.”

He accordingly submits that considering the aforesaid clear position in law, the view which has been taken by the Tribunal in the impugned order, is required Downloaded on - 27/10/2026 17:48:22 to be confirmed considering the decision of the Supreme Court in Sharp Business System vs. Commissioner of Income-tax (supra). Mr. Agarwal has placed reliance Court in Taparia Tools Ltd. (supra) in such context:- “17. Thus, the first thing which is to be noticed is that though the entire expenditure was incurred in that year, it was the assessee who wanted the spread over. The Court was conscious of the principle that normally revenue expenditure is to be allowed in the same year in which it is incurred, but at the instance of the assessee, who wanted spreading over, the Court agreed to allow the assessee that benefit when it was found that there was a continuing benefit to the business of the company over the entire period.

What follows from the above is that normally the ordinary rule is to be applied, namely, revenue expenditure incurred in a particular year is to be allowed in that year. Thus, if the assessee claims that expenditure in that year, the IT Department cannot deny the same. However, in those cases where the assessee himself wants to spread the expenditure over a period of ensuing years, it can be allowed only if the principle of ‘Matching Concept’ is satisfied, which upto now has been restricted to the cases of debentures.

In the instant case, as noticed above, the assessee did not want spread over of this expenditure over a period of five years as in the return filed by it, it had claimed the entire interest paid upfront as deductible expenditure in the same year. In such a situation, when this course of action was permissible in law to the assessee as it was in consonance with the provisions of the Act which permit the assessee to claim the expenditure in the year in which it was incurred, merely because a different treatment was given in the books of account cannot be a factor which would deprive the assessee from claiming the entire expenditure as a deduction. It has been held repeatedly by this Court that entries in the books of account are not determinative or conclusive and the matter is to be examined on the touchstone of provisions contained in the Act [See - Kedarnath Jute Mfg. Co Ltd. v. CIT [1971] 82 ITR 363 (SC); Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT [1997] 227 ITR 172/93 Taxman 502 (SC); Sutlej Cotton Mills Ltd. v. CIT [1979] 116 ITR 1 (SC) and United Commercial Bank v. CIT [1999] 240 ITR 355/106 Taxman 601 (SC).” 2 (2015)372 ITR 605(SC) Downloaded on - 27/10/2026 17:48:22

Mr. Mohanty, learned Counsel for the Revenue, would submit that in Sharp Business System vs. Commissioner of Income-tax (supra), although the Supreme Court has laid down that the payment made by the appellant therein to L&T towards non-compete fee is an allowable revenue expenditure under Section 37(1) of the Act, the assessee's contention/claim that the same be permitted to be treated as a deferred revenue expenditure would require consideration by the Tribunal. He would, therefore, submit that it would be appropriate to remand the proceedings to the Tribunal, so that an appropriate course of action can be adopted by the Tribunal in passing appropriate orders, considering the decision of the Supreme Court in Sharp Business System (supra).

Such contention as urged on behalf of the Revenue by Mr. Mohanty is opposed by Mr. Agarwal, learned Counsel appearing for the respondent-Assessee, in submitting that no useful purpose would be served in remanding the proceedings to the Tribunal, once the Supreme Court has settled the position in law, the payment of non-compete fees by the assessee, in the present case to Piramal Healthcare Limited, needs to be held as an allowable revenue expenditure under Section 37(1) of the Act. He would also submit that, considering the fact that the order passed by CIT(A), the subject matter of challenge before the Tribunal by the Revenue, had accepted the assessee’s plea that such amount be permitted to be treated as deferred revenue expenditure, no useful purpose would be served in remanding the proceedings. It is hence his contention that the position in law being no more res integra, remand to the Assessing Officer for Downloaded on - 27/10/2026 17:48:22 such purpose would be a mere formality, as the Assessing Officer would only be required to undertake the consequential exercise, pursuant to which the appropriate effect of such deferred revenue expenditure can be taken into consideration.

We are not persuaded to fully accept Mr. Mohanty’s contention, as we find that the issue of law is no more res integra. The Supreme Court in Sharp Business System vs. Commissioner of Income-tax (supra) and Principal Commissioner of Income Tax Vs. Piramal Glass Limited (supra) has conclusively held that non- compete fees are required to be allowed as revenue expenditure under Section 37(1) of the IT Act. This was also the conclusion of CIT(A) in the present proceedings. Thus, what remains is only to give effect to the same by the Assessing Officer insofar as the relevant Assessment Years are concerned. To accept the contention of Mr. Mohanty, that the proceedings be remanded to the Tribunal, we do not find that there is any substantive issue which now would be required to be gone into or answered by the Tribunal on any remand, as the law as laid down by the Supreme Court is now available, which in fact, in our opinion, confirms the view taken by the CIT(A). In this view of the matter, we may also observe that once the assessee in the present case has accepted such amounts to be accounted as deferred revenue expenditure, the assessee cannot be allowed to claim depreciation on such amounts, as this would be incongruous.

Thus, for the aforesaid reasons, the present appeal is required to be Downloaded on - 27/10/2026 17:48:22 dismissed observing that no substantive question of law arises for considering in view of the authoritative pronouncements by the Supreme Court in Sharp Business System vs. Commissioner of Income-tax (supra) and Principal No.229/Mum/2020 and passed an order dated 8 March 2026 whereby the order, to the extent it did not adjudicate the additional ground, is recalled and a consequential order was passed on 2 August 2022, whereby the additional ground as urged on behalf of the assessee was accepted and the assessee’s claim for depreciation on the non-compete fees paid by the assessee to Piramal Health Care Ltd. was accepted, following the decision of this Court in Pr. Commissioner of Income Tax-7 vs. Piramal Glass Ltd.

It is the assessee’s contention that such order dated 2 August 2022 passed by the Tribunal has not been assailed by the Revenue. In our opinion, although the Tribunal has passed the order dated 2 August 2022 which is the subject matter of challenge in the companion appeal, be that as it may, the fact remains that the order dated 6 January 2022 would be required to be accepted in the context of the issue of non-compete fees which are now permitted to be allowed as revenue expenditure in view of the decision of the Supreme Court in Sharp Business System vs. Commissioner of Income-tax 3 Income Tax Appeal No.556 of 2017 dt. 11/06/2019 Downloaded on - 27/10/2026 17:48:22 (supra). The order dated 2 August 2022 passed by the Tribunal, thus, would not be of any consequence.

Appeal dismissed. No costs.

Pending Interim Application would not survive. It is disposed of. (Dr.NEELA GOKHALE, J.) (G. S. KULKARNI, J.) Downloaded on - 27/10/2026 17:48:22 Powered by TCPDF (www.tcpdf.org)