Section 43(6) of the Income Tax Act
Income-tax Act, 2025: ss.39, 41
Section 43(6) falls under section 43 of the Income-tax Act, 1961, which corresponds to section 39 (Computation of actual cost) and section 41 (Written down value of depreciable asset) of the Income-tax Act, 2025.
Read section 39 of the 2025 ActRead section 41 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 43(6) is Joint Commissioner. 10. In Shin Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd. (7 SCC 234), cited in 75 of the 173 judgments on BharatTax that turn on this section.
Leading authorities on Section 43(6)
A statute prescribing a procedure using negative language (e.g., 'in no other manner') imposes absolute requirements, and failure to comply will invalidate the entire proceeding.
A non-compete fee, being a capital expenditure, is not allowable as a deduction from income and does not qualify for depreciation under Section 32(1)(ii) of the Income-tax Act, 1961.
Depreciation is allowable on a non-compete fee as it constitutes an intangible asset, even if the right acquired cannot be transferred, provided it is treated as part of a block of assets.
A word, clause, or sentence from a court judgment, when taken out of context, does not represent a complete exposition of the law on a question that the judgment did not explicitly address.
Depreciation on goodwill arising from amalgamation is not admissible to the amalgamated company if no goodwill was admitted in the hands of the amalgamating company, applying Explanation 7 to Section 43(1) and the Sixth Proviso to Section 32(1)(ii).
Depreciation is allowable on goodwill as an intangible asset under Section 32(1)(ii) when it arises from a scheme of amalgamation or similar corporate restructuring.
Depreciation is allowable on non-compete fees when a businessman pays another to restrain them from competing, as this constitutes an intangible asset.
Depreciation is not allowable on non-compete fees if they represent the acquisition of a business or commercial right, rather than an identifiable intangible asset.
Only the ratio decidendi of a judgment, which is the principle of law that decides the dispute, can be relied upon as precedent, not obiter dicta or casual observations. A court's decision must be read as a whole and its observations considered in light of the questions before the court.
A court decision can only be relied upon for its ratio decidendi, which is the principle of law that decides the dispute. Obiter dicta or casual observations are not binding precedents. A decision cannot be cited to support the proposition that it did not decide something.
