Deputy Commissioner of Income Tax Circle-6(1)(1), Bangalore V. M/s Sangeetha Mobiles Pvt Ltd , Bangalore

ITA 881/BANG/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3962 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 21-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SIDDAPP A JI R N
• Keywords: Depreciation; Capital expenditure
• Section: 143(3); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI JASON P BOAZ, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER I.T. A. NO. 88 1 /BANG/2018 (ASSESSMENT YEAR : 20 13 - 14 ) DY. COMMISSIONER OF INCOME TAX, CIRCLE 6(1)(1), BANGAL ORE. . APPELLANT. VS. M/S. SANGEETHA MOBILES PVT. LTD., NO.1183M 22 ND A CROSS, BANASHANKARI 2 ND STAGE, BANGALORE - 560 070 . .. RESPONDENT. APPELLANT BY : SHRI SIDDAPPAJI R N, ADDL. CIT (D.R) R E SPONDENT BY : SHRI NARENDRA SHARMA, ADVOCATE. DATE OF H EARING : 25.09 .2018. DATE OF P RONOUNCEMENT : 05. 10 .201 8 . O R D E R PER SHRI JASON P BOAZ, A .M . : THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 6 , BANGALORE DT. 13.10.2017 FOR THE ASSESSMENT YEAR 20 13 - 14 . 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UNDER : - 2 IT A NO. 88 1 /BANG/201 8 2.1 THE ASSESSEE - COMPANY, A DEALER IN MOBILE PHONES AND ACCESSORIES, FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2013 - 14 ON 29.10.2013 DECLARING INCOME OF RS. 14,60,30,820 . THE RET URN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DT.2 8 .3.201 6 , WHEREIN THE ASSESSEE'S INCOM E WAS DETERMINED AT RS. 15,89,56,000 IN VIEW OF THE ADDITION / DISALLOWANCE ON ACCOUNT OF DEPRECIATION ON GOODWILL AMOUNTING TO RS.1,29,25,1999 . 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT DT.2 8.03.2016 FOR ASSESSMENT YEAR 2013 - 14 , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (APPEALS) 6, BANGALORE. THE LEARNED CIT (APPEALS) ALLOWED THE ASSESSEE'S APPEAL VIDE ORDER DT.13.10.2017, FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE IN ITA NOS.1185 & 1186/BANG/2 016 DT.3.11.2016 FOR ASSESSMENT YEARS 2010 - 11 & 2011 - 12. 3 IT A NO. 88 1 /BANG/201 8 3. REVENUE, BEING AGGRIEVED BY THE ORDER OF THE CIT (APPEALS) 6, BANGALORE DT. 13.10.2017 FOR ASSESSMENT YEAR 2013 - 14 HAS FILED THIS APPEAL, WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS : - 4. GROUNDS 1, 4 & 5 (SUPRA) BEING GENERAL IN NATURE, NO ADJUDICATION IS CALLED FOR THEREON. 4 IT A NO. 88 1 /BANG/201 8 5. GROUND NOS.2 & 3 DEPRECIATION ON GOODWILL / NON - COMPETE FEE . 5.1 IN THESE GROUNDS, REVENUE CHALLENG ES THE LEARNED CIT (APPEALS) S ORDER FOR APPLYI NG THE RATIO OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. M/S. INGERSOLL RAND INTERNATIONAL IND . LTD. DT.30.6.2014 (227 TAXMANN.COM 176) AND THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YE ARS 2010 - 11 & 2011 - 12 AND ALLOWING DEPRECIATION ON THE ADDITIONAL AMOUNT PAID BY THE ASSESSEE BY TREATING IT AS EITHER GOODWILL ON NON - COMPETE FEE. REVENUE CONTENDS THAT THE ADDITIONAL AMOUNT PAID BY THE ASSESSEE IS IN THE NATURE OF CAPITAL EXPENDITURE IN CURRED TOWARDS EASING OUT COMPETITION AND THEREFORE THE LEARNED CIT (APPEALS) OUGHT TO HAVE FOLLOWED THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF SHARP BUSINESS SYSTEMS VS. CIT (254 CTR 233). THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR R EVENUE WAS HEARD IN SUPPORT OF THE GROUNDS RAISED. 5.2 PER CONTRA, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IN QUESTION HAS CONSIDERED AND HELD IN FAVOUR OF THE ASSESSEE AND AGAINST R EVENUE BY CO - ORDINATE BENCH O F THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEARS 2010 - 11 AND 2011 - 12 IN ITA NO.1185 & 1186/BANG/2016 DT.3.11.2016 AND ASSESSMENT YEAR 2012 - 5 IT A NO. 88 1 /BANG/201 8 13 IN ITA NO.715/BANG/2017 DT.15.6.2018 WHEREIN THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN TH E CASE OF INGERSOLL RAND INTERNATIONAL IND. LTD. (SUPRA) WAS FOLLOWED AFTER CONSIDERING THE DECISION OF THE HON'BLE HIGH COURT OF DELHI CITED ( SUPRA ) . 5.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL DECISIONS CITED. WE FIND THAT THE ISSUE OF ALLOWING DEPRECIATION ON THE ADDITIONAL AMOUNT PAID BY THE ASSESSEE AS GOODWILL HAS BEEN CONSIDERED AND DECIDE D IN FAVOUR OF THE ASSESSEE BY CO - ORDINATE BENCH ES OF THIS TRIBUNAL IN THE ASSE SSEE'S OWN CASE FOR ASSESSMENT YEARS 2010 - 11 , 2011 - 12 AND 2012 - 13 (SUPRA), WHEREIN THE CO - ORDINATE BENCH OF THIS TRIBUNAL HAS FOLLOWED THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF INGERSOL RAND INTERNATIONAL IND LTD. (SUPRA) AFTER DULY CONSIDERING THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF SHARP BUSINESS SYSTEMS (SUPRA). AT PARAS 4 TO 7 OF ITS ORDER IN ITA NOS.1185 & 1186/BANG/2016 DT.3.11.2016, THE CO - ORDINATE BENCH HAS HELD AS UNDER : - 4. REGARDING THE FIRST ISSU E, IT IS SUBMITTED BY THE LEARNED AR OF THE ASSESSEE THAT THE COPY OF ASSETS PURCHASE AGREEMENT IS AVAILABLE ON PAGES 78 TO 115 OF THE PAPER BOOK AND FROM THE SAME, IT CAN BE SEEN THAT THE ASSESSEE HAS PURCHASED VARIOUS TANGIBLE ASSETS AS LISTED ON PAGE 11 0 TO 111 OF THE PAPER BOOK AND DEPOSITS WITH VARIOUS LANDLORDS OF RS. 63.14 LACS AS PER DETAILS ON PAGES 112 TO 113 OF THE PAPER BOOK IS ALSO TAKEN OVER BY THE ASSESSEE. HE SUBMITTED THAT IN ADDITION TO THIS, THE ASSESSEE HAS ALSO ACQUIRED THE TRADE MARK WAVETEL ALONG WITH CORPORATE NAME, TRADE NAME, DOMAIN NAMES AND OTHER INTELLECTUAL PROPERTY RIGHTS 6 IT A NO. 88 1 /BANG/201 8 OF WAVE AS CAN BE SEEN ON PAGE 103 OF THE PAPER BOOK. THEREAFTER, HE DRAWN OUR ATTENTION TO PAGE 102 OF THE PAPER BOOK AND SUBMITTED THAT THIS WAS ALSO AGRE ED THAT WAVE AND MR. V. F. JOHN YESUDHAS WILL NOT DO ANYTHING FOR 12 MONTHS, WHICH MAY BE DEEMED TO BE IN COMPETITION WITH THE BUSINESS OF THE ASSESSEE. THEREAFTER HE DRAWN OUR ATTENTION TO PARA 4 OF THE AGREEMENT ON PAGES 87 & 88 OF THE PAPER BOOK AND PO INTED OUT THAT THE PURCHASE PRICE AGREED IS RS. 13 CRORES IN A COMBINED MANNER. THEN HE POINTED OUT THAT AT PAGES 125 & 126 OF THE PAPER BOOK IS THE INVOICE RAISED BY WAVE AND AS PER THE SAME, THE VALUE OF TANGIBLE ASSETS IS RS. 179,69,104/ - INCLUDING INTE RIORS RS. 118,76,051 PLUS VAT. THEREAFTER, HE DRAWN OUR ATTENTION TO PAGE 3 OF THE ASSESSMENT ORDER WHERE THE A.O. HAS NOTED THAT THE ASSESSEE HAS ACCOUNTED FOR RS. 63.14 LACS AS RENT DEPOSITS AND CLAIMED DEPRECIATION ON FIXED ASSETS RS. 179,69,105/ - AND A LSO CLAIMED DEPRECIATION ON GOODWILL RS. 1050,42,884/ - . THEN HE SUBMITTED THAT AS PER THE A. O., THE AMOUNT OF RS. 1050,42,884/ - IS NOT GOODWILL BUT PAYMENT FOR ELIMINATING COMPETITION FROM WAVE COMMUNICATION AND IT IS NORMALLY TERMED AS FEE PAID FOR NON COMPETITION. FOR THIS, HE DREW OUR ATTENTION TO PAGE 8 OF THE ASSESSMENT ORDER. THEREAFTER HE SUBMITTED THAT AS PER THE ASSESSEE, THIS PAYMENT OF RS. 1050.43 LACS IS FOR GOODWILL BUT EVEN IF THE CONTENTION OF THE A. O. IS ACCEPTED THAT THIS IS NOT GOODWIL L BUT NON COMPETE FEE THEN ALSO DEPRECIATION IS ALLOWABLE AT SAME RATE I.E. APPLICABLE TO INTANGIBLE ASSETS. IN SUPPORT OF THIS CONTENTION, HE PLACED RELIANCE ON THE JUDGMENT OF HON BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. M/S INGERSOLL RAN D INTERNATIONAL IND. LTD. IN ITA NO. 452 OF 2013 DATED 30.06.2004 (227 TAXMAN.COM 176), COPY ON PAGES 181 TO 205 OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT PARA 8 OF THIS JUDGMENT ON PAGES 200 TO 205 OF THE PAPER BOOK IS RELEVANT AS PER WHICH IT IS HELD BY HON BLE KARNATAKA HIGH COURT THAT THE RIGHT ACQUIRED BY THE ASSESSEE ON PAYMENT OF NON COMPETE FEES IS A COMMERCIAL OR A BUSINESS RIGHT WHICH IS SIMILAR IN NATURE TO KNOW HOW, PATENTS, COPYRIGHTS, LICENSES, FRANCHISES ETC AND IT FALLS IN THE CATEGORY OF INTANGIBLE ASSETS AND CONSEQUENTLY DEPRECIATION IS ALLOWABLE U/S 32 (1) (III). 5. AS AGAINST THIS, LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE ALSO SUBMITTED THAT IT IS NOTED BY THE LEARNED CIT (A) IN PARA 14 OF HIS ORDER THAT IN THE REMAND REPORT (COPY ON PAGES 142 TO 144 OF THE PAPER BOOK), THE A.O. HAS DISTINGUISHED THE FACTS OF THE PRESENT CASE WITH THE FACTS IN THE CASE OF CIT VS. M/S INGERSOLL RAND INTERNATIONAL IND. LTD. (SUPRA). AT THIS JUNCTURE, A QUERY WAS R AISED BY THE BENCH ASKING THE LEARNED DR OF THE REVENUE TO POINT OUT THE DIFFERENCE IN FACTS AS REPORTED BY THE AO IN THE REMAND REPORT. IN REPLY, LEARNED DR OF THE REVENUE POINTED OUT THAT THE A.O. REPORTED THAT THE AO HAS REPRODUCED RELEVANT OBSERVATIONS OF HON BLE HIGH COURT AS PER WHICH, IN THAT CASE, THE RIGHT ACQUIRED BY WAY OF NON COMPETE CAN BE TRANSFERRED TO ANY OTHER PERSON. HE SUBMITTED THAT IN THE PRESENT CASE, THE RIGHTS ACQUIRED BY THE ASSESSEE BY WAY OF NON COMPETE CANNOT BE TRANSFERRED TO AN Y OTHER PERSON AND THEREFORE, THIS JUDGMENT IS NOT APPLICABLE IN THE PRESENT CASE AND IN THE PRESENT CASE, THE JUDGMENT OF HON BLE DELHI HIGH COURT RENDERED IN THE CASE OF SHARP BUSINESS SYSTEM VS. CIT, 254 CTR 233 IS APPLICABLE. 6. WE HAVE CONSIDERED T HE RIVAL SUBMISSIONS. REGARDING THE ISSUE IN RESPECT OF ALLOWABILITY OF DEPRECIATION ON GOODWILL/NON COMPETE FEES, WE FIND THAT AS PER THE FACTS NOTED BY HON BLE KARNATAKA HIGH COURT IN PARA 8 AS REPRODUCED BELOW, THE RIGHT ACQUIRED BY WAY OF NON COMPETE C AN BE TRANSFERRED TO ANY OTHER PERSON BUT IN THE CASE OF SHARP BUSINESS SYSTEM VS. CIT (SUPRA), HON BLE DELHI HIGH COURT JUDGMENT IS ON THE BASIS OF THIS FACT OF THAT CASE THAT THE RIGHT ACQUIRED BY WAY OF NON COMPETE CANNOT BE TRANSFERRED TO ANY OTHER PER SON: - 7 IT A NO. 88 1 /BANG/201 8 8. THEREFORE WHAT IS TO BE SEEN IS, WHAT ARE THE NATURE OF INTANGIBLE ASSETS WHICH WOULD CONSTITUTE BUSINESS OR COMMERCIAL RIGHTS TO BE ELIGIBLE FOR DEPRECIATION. IN THIS REGARD, IT IS NECESSARY TO NOTICE THAT THE INTANGIBLE ASSETS ENUMERATED IN S EC.32 OF THE ACT EFFECTIVELY CONFER A RIGHT UPON AN ASSESSEE FOR CARRYING ON A BUSINESS MORE EFFICIENTLY BY UTILIZING AN AVAILABLE KNOWLEDGE OR BY CARRYING ON A BUSINESS TO THE EXCLUSION OF ANOTHER ASSESSEE. A NON - COMPETE RIGHT ENCOMPASSES A RIGHT UNDER WH ICH ONE PERSON IS PROHIBITED FROM COMPETING IN BUSINESS WITH ANOTHER FOR A STIPULATED PERIOD. IT WOULD BE THE RIGHT OF THE PERSON TO CARRY ON A BUSINESS IN COMPETITION BUT FOR SUCH AGREEMENT OF NON - COMPETE. THEREFORE THE RIGHT ACQUIRED UNDER A NON - COMPETE AGREEMENT IS A RIGHT FOR WHICH A VALUABLE CONSIDERATION IS PAID. THIS RIGHT IS ACQUIRED SO AS TO ENSURE THAT THE RECIPIENT OF THE NON - COMPETE FEE DOES NOT COMPETE IN ANY MARINER WITH THE BUSINESS IN WHICH HE WAS EARLIER ASSOCIATED. THE OBJECT OF ACQUIRING A KNOW - HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENCES, FRANCHISES IS TO CARRYON BUSINESS AGAINST RIVALS IN THE SAME BUSINESS IN A MORE EFFICIENT MANNER OR TO PUT IT DIFFERENTLY IN A BEST POSSIBLE MANNER. THE OBJECT OF ENTERING INTO A NONCOMPETE AGREEMENT IS ALSO THE SAME IE., TO CARRY ON BUSINESS IN A MORE EFFICIENT MANNER BY AVOIDING COMPETITION, ATLEAST FOR A LIMITED PERIOD OF TIME. ON PAYMENT OF NON - COMPETE, THE PAYER ACQUIRES A BUNDLE OF RIGHTS SUCH AS RESTRICTING RECEIVER DIRECTLY OR INDIRECTLY PARTIC IPATING IN A BUSINESS WHICH IS SIMILAR TO THE BUSINESS BEING ACQUIRED, FROM DIRECTLY OR INDIRECTLY SOLICITING OR INFLUENCING CLIENTS OR CUSTOMERS OF THE EXISTING BUSINESS OR ANY OTHER PERSON EITHER NOT. TO DO BUSINESS WITH THE PERSON WHO HAS ACQUIRED THE B USINESS AND PAID THE NON - COMPETE TEE OR TO DO BUSINESS WITH THE PER - SON RECEIVING THE NON - COMPETE FEE TO DO BUSINESS WITH A PERSON WHO IS DIRECTLY OR INDIRECTLY IN COMPETITION WITH THE BUSINESS WHICH IS BEING ACQUIRED. THE RIGHT IS ACQUIRED FOR CARRYING ON THE BUSINESS AND THEREFORE, T IS A BUSINESS RIGHT. THE WORD COMMERCAL IS DEFINED IN BLACK S LAW DICTIONARY AS RELATED TO OR CONNECTED WITH TRADE AND COMMERCE IN GENERAL COMMERCE IS DEFINED AS THE EXCHANGE OF GOODS, PRODUCTIONS OR PROPERTY OF ANY KIN D, THE BUYING, SELLING AND EXCHANGING OF ARTICLES . A RIGHT BY WAY OF NON - COMPETE IS ACQUIRED ESSENTIALLY FOR TRADE AND COMMERCE AND THEREFORE, IT WILL ALSO QUALIFY AS A COMMERCIAL RIGHT. A RIGHT ACQUIRED BY WAY OF NON - COMPETE CAN BE TRANSFERRED TO ANY OT HER PERSON IN THE SENSE THAT THE ACQUIRER GETS THE RIGHT TO ENFORCE THE PERFORMANCE OF THE TERMS OF AGREEMENT UNDER WHICH A PERSON IS RESTRAINING THE OTHER BUSINESSMAN FROM COMPETING WITH THE ASSESSEE, HE GETS A VESTED. RIGHT WHICH CAN BE ENFORCED UNDER LA W ARID WITHOUT .THAT, THE OTHER BUSINESSMAN CAN COMPETE WITH THE FIRST BUSINESSMAN. WHEN BY PAYMENT CF NON - COMPETE FEE, THE BUSINESSMAN GETS HIS RIGHT WHAT BE IS PRACTICALLY GETTING IS KIND OF MONOPOLY TO RUN HIS BUSINESS WITHOUT BOTHERING ABOUT THE COMPET ITION. GENERALLY, NON - COMPETE FEE IS PAID FOR A DEFINITE PERIOD. THE IDEA IS THAT BY THAT TIME, THE BUSINESS WOULD STAND FIRMLY ON ITS OWN FOOTING AND CAN SUSTAIN LATER ON. THIS CLEARLY SHOWS THAT HE COMMERCIAL RIGHT COMES INTO EXISTENCE WHENEVER THE ASSES SEE MAKES PAYMENT FOR NON - COMPETE FEE. THEREFORE, THAT RIGHT WHICH THE ASSESSEE ACQUIRES ON PAYMENT OF NONCOMPETE FEE CONFERS IN HIM A COMMERCIAL OR A BUSINESS RIGHT WHICH IS HELD O BE SIMILAR IN NATURE TO KNOW - HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENCE S, FRANCHISES. THEREFORE, THE COMMERCIAL RIGHT THUS ACQUIRED BY THE ASSESSEE UNAMBIGUOUSLY FALLS IN THE CATEGORY OF AN INTANGIBLE ASSET . THEIR RIGHT TO CARRY ON BUSINESS WITHOUT COMPETITION HAS AN ECONOMIC INTEREST AND MONEY VALUE. THE TERM OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE HAS TO BE INTERPRETED IN SUCH A WAY THAT IT WOULD HAVE SOME SIMILARITIES AS OTHER ASSETS MENTIONED IN CL(B) OF EXPLN.3. HERE THE DOCTRINE OF EJUSDEM GENERIS WOULD COME INTO OPERATION AND THEREFORE, THE NON - CO MPETE FEE VESTS A RIGHT IN THE ASSESSEE TO CARRY ON BUSINESS WITHOUT COMPETITION WHICH IN TURN CONFERS A 8 IT A NO. 88 1 /BANG/201 8 COMMERCIAL RIGHT TO CARRY ON BUSINESS SMOOTHLY. WHEN ONE THE EXPENDITURE INCURRED FOR ACQUIRING THE SAID RIGHT IS HELD TO BE CAPITAL IN NATURE. CONSEQ UENTLY, THE DEPRECIATION PROVIDED UNDER SEC.32(1)(II) IS ATTRACTED AND THE ASSESSEE WOULD BE ENTITLED TO THE DEDUCTION AS PROVIDED IN THE SAID PROVISION I.E PRECISELY WHAT THE TRIBUNAL HAS HELD . 7. NOW WE EXAMINE THE FACTS OF THE PRESENT CASE TO SEE A S TO WHETHER THE RIGHTS ACQUIRED BY THE ASSESSEE BY WAY OF NON COMPETE CAN BE TRANSFERRED TO ANY OTHER PERSON OR NOT. WHEN WE CAREFULLY GO THROUGH THIS JUDGMENT IN FULL AND PARA 8 AS REPRODUCED ABOVE IN PARTICULAR, WE REACH TO THE CONCLUSION THAT THE MAIN BASIS OF THE JUDGMENT OF HON BLE KARNATAKA HIGH COURT IS THIS THAT ON PAYMENT OF NON COMPETE FEES, THE PAYER ACQUIRES A BUNDLE OF RIGHTS SUCH AS RESTRICTING RECEIVER DIRECTLY OR INDIRECTLY PARTICIPATING IN A BUSINESS WHICH IS SIMILAR TO THE BUSINESS BEING ACQUIRED, FROM DIRECTLY OR INDIRECTLY SOLICITING OR INFLUENCING CLIENTS OR CUSTOMERS OF THE EXISTING BUSINESS OR ANY OTHER PERSON EITHER NOT TO DO BUSINESS WITH THE PERSON WHO HAS ACQUIRED THE BUSINESS AND PAID NON COMPETE FEES OR TO DO BUSINESS WITH A PER SON WHO IS DIRECTLY OR INDIRECTLY IN COMPETITION WITH THE BUSINESS WHICH IS BEING ACQUIRED. THESE RIGHTS ARE HELD TO BE BUSINESS RIGHTS. THEREAFTER, IT IS NOTED BY HON BLE KARNATAKA HIGH COURT THAT THIS RIGHT CAN BE TRANSFERRED TO ANY OTHER PERSON IN THE S ENSE THAT THE ACQUIRER GETS THE RIGHT TO ENFORCE THE PERFORMANCE OF THE TERMS OF AGREEMENT UNDER WHICH A PERSON IS RESTRAINED FROM COMPETING. IN THE PRESENT CASE ALSO, IT IS SPECIFIED IN PARA 11 OF THE AGREEMENT PAGE 102 OF THE PAPER BOOK THAT UNLESS PERM ITTED BY THE ASSESSEE I.E. SMPL, WAVE AND MR. V. F. JOHN YESUDHAS WILL NOT DO ANYTHING WHICH MAY AMOUNT TO COMPETITION WITH THE PRESENT ASSESSEE. HENCE IN THE PRESENT CASE ALSO, THE ASSESSEE I.E. THE ACQUIRER GETS THE RIGHT TO ENFORCE THE PERFORMANCE OF TH E TERMS OF AGREEMENT UNDER WHICH THE SELLER WAVE AND MR. V. F. JOHN YESUDHAS INCLUDING THEIR ASSOCIATES, PARTNERS AND RELATIVES SHALL NOT COMPETE WITH THE ASSESSEE I.E. THE ACQUIRER. HENCE, IN OUR CONSIDERED OPINION, THE FACTS OF THE PRESENT CASE ARE SIMIL AR TO THE FACTS IN THE CASE OF THE JUDGMENT IN THE CASE OF CIT VS. M/S INGERSOLL RAND INTERNATIONAL IND. LTD. (SUPRA) AND IN THE PRESENT CASE ALSO, THIS RIGHT ACQUIRED BY THE ASSESSEE CAN BE TRANSFERRED TO ANY OTHER PERSON IN THE SENSE THAT THE ASSESSEE AC QUIRER GETS THE RIGHT TO ENFORCE THE PERFORMANCE OF THE TERMS OF AGREEMENT UNDER WHICH THE SELLER IS RESTRAINED FROM COMPETING. THEREFORE, RESPECTFULLY FOLLOWING THIS JUDGMENT, WE HOLD THAT EVEN IF THE RIGHT ACQUIRED BY THE ASSESSEE IS HELD TO BE NON COMPE TE RIGHT THEN ALSO, IT IS ELIGIBLE FOR DEPRECIATION U/S 32 (1) (III). REGARDING THE JUDGMENT OF HON BLE DELHI HIGH COURT ON WHICH RELIANCE HAS BEEN PLACED BY THE LEARNED DR OF THE REVENUE I.E. THE JUDGMENT RENDERED IN THE CASE OF SHARP BUSINESS SYSTEM VS. CIT (SUPRA), WE HOLD THAT SINCE, WE ARE FOLLOWING THE JUDGMENT OF HON BLE JURISDICTIONAL HIGH COURT, THE JUDGMENT OF ANY OTHER HIGH COURT IS NOT RELEVANT EVEN IF THE SAME IS CONTRARY TO THE JUDGMENT OF HON BLE JURISDICTIONAL HIGH COURT BECAUSE WE ARE BOUN D TO FOLLOW THE JUDGMENT OF HON BLE JURISDICTIONAL HIGH COURT. HENCE, WE DO NOT EXAMINE THE APPLICABILITY OF THIS JUDGMENT. NOW, THIS ASPECT HAS BECOME ACADEMIC AS TO WHETHER THE RIGHT ACQUIRED IS GOODWILL OR NON COMPETE RIGHT. ACCORDINGLY, GROUND NO. 2 IN BOTH YEARS IS ALLOWED. 5.3.2 RESPECTFULLY FOLLOWING THE DECISIONS OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF INGERSOLL RAND INTERNATIONAL IND LTD. (SUPRA) AND 9 IT A NO. 88 1 /BANG/201 8 OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSES SMENT YEARS 2010 - 11, 2011 - 12 AND 2012 - 13 (SUPRA) , WE UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT (APPEALS) IN ALLOWING THE ASSESSEE'S CLAIM FOR DEPRECIATION ON THE ADDITIONAL AMOUNT PAID BY THE ASSESSEE. CONSEQUENTLY, GROUNDS 2 AND 3 OF REVENUE S APPEAL ARE DISMISSED. 6. IN THE RESULT, REVENUE S APPEAL FOR ASSESSMENT YEAR 2013 - 14 IS DISMISSED. PR O N O U N C E D I N T H E O P EN C O U RT O N 5 TH OCT., 2 0 1 8 . SD/ - ( LALIET KUMAR ) JUDICIAL MEMBER SD/ - (JASON P BOAZ) ACCOUNTANT MEMBER BANGALORE, DT. 05 .09 .2018. *REDDY GP COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDENT 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE CERTIFIED TRUE COPY ASST. REGISTRAR INCOME TAX APPELLATE TRIBUNAL BANGALORE.