M/S. INDO NATIONAL LIMITED,CHENNAI V. ACIT COPRATE CRICLE-2(2), CHENNAI, CHENNAI

ITA 1404/CHNY/2023

AI Insights

The case involves appeals by M/s. Indo National Ltd against the orders of the Commissioner of Income Tax (Appeals) which confirmed the disallowance of certain deductions claimed by the company. The primary issues were the disallowance of a weighted deduction under section 35(2AB) for research and development expenses and the treatment of non-compete fees paid as capital expenditure. The Tribunal examined the compliance with procedural requirements for claiming deductions and the nature of the expenses in question.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107016 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Other Referred Cases: M/s. Sundaram Fasteners Ltd. vs. ITA No.3236/Chny/2017, Hatsun Agro Products Ltd. vs. JCIT (407 ITR 674) (2017), CIT Vs. Max India Ltd. (2018), Revathi Equipment Ltd. vs. ACIT (Madras High Court) 129 (2021), GKN Driveline India Ltd. vs. CIT 88 taxmann.com 208 (Delhi) (2017), NELITO Systems Ltd. vs. DCIT 27 taxmann.com 201 (Mum-/TAT)(2012), Tecumseh India Pvt Ltd Vs Addl. CIT (127 ITD 1), Assam Bengal Cement Co. Ltd. vs. CIT [1955] 27 ITR 34, Coal Shipment (P.) Ltd. vs. CIT, Pentasoft Technologies Ltd Vs DCIT (41 taxmann.com 120), Areva T & D India Ltd [TS-231-HC-2021(MAD)]
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S. SUNDAR RAJAN
• Assessee Lawyers: NR. VIJAYARAGHAVAN
• Keywords: Set aside; Revenue expenditure; Depreciation; Capital expenditure
• Section: 201; 32; 208; 37(1)

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ \u0001यायपीठ, चे\tई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI \u0001ी एबी टी. वक , \u000bाियक सद\u0011 एवं एवं एवं एवं \u0001ी मनोज क ुमार अ\u0019वाल, लेखा सद\u0007 क े सम\u001d BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRIMANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos. 1404 & 1405/Chny/2023 िनधा\u000bरण वष\u000b/Assessment Years: 2015-16 & 2016-17 M/s. Indo National Limited, No.77, 3rd Floor, Pottipati Plaza, Nungambakkam, Chennai – 600 034. v. ACIT, Corporate Circle -2(2), Chennai. [PAN: AAACI2291L] (अपीलाथ\u000e/Appellant) (\u000f\u0010यथ\u000e/Respondent) अपीलाथ\u000e क\u0012 ओर से/ Appellant by : Mr. NR. Vijayaraghavan, Advocate \u000f\u0010यथ\u000e क\u0012 ओर से /Respondent by : Mr. S. Sundar Rajan, JCIT सुनवाईक\u0012तारीख/Date of Hearing : 01.01.2025 घोषणाक\u0012तारीख /Date of Pronouncement : 19.03.2025 आदेश / O R D E R PER ABY T. VARKEY, JM: These appeals preferred by the assessee company against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter in short \"the Ld.CIT(A)”), Delhi, dated 30.06.2023 for the Assessment Years (hereinafter in short \"AY”) 2015-16 & 2016-17. 2. At the outset, the Ld. Counsel for the assessee submitted that there is a delay of ‘93’ days in filing of these appeals for the AYs 2015 2016-17 and that was because assessee was prevented by sufficient cause from filing it on time. Hence, the Ld. Counsel for the assessee prayed for condonation of delay, for which, the Ld.DR objects; having taking note of the reason the delay. Hence, we condone the delay of ‘93’ days and proceed to adjudicate both the appeals on merits. 3. First, we will take up appeal for No.1404/Chny/2023. It is noted that Ground no.1 is general in nature, therefore, it doesn’t require any adjudication. disallowance of weighted deduction of the Act since expenditure 4. Brief facts are that, the assessee Return of Income (in short “RoI\") for AY 2015 admitting total income of Rs.27,34,34,800/ for scrutiny, and the AO framed the assessment on 30.12.2017 and assessed total income of Rs.30,59,75,636/ assessee has claimed an amount of Rs.19,78,332/ deduction u/s. 35(2AB) of the Act. According to the AO, as per section 35(2AB) of the Act, if a company is engaged in any business of ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::2 :: At the outset, the Ld. Counsel for the assessee submitted that there is a delay of ‘93’ days in filing of these appeals for the AYs 2015 17 and that was because assessee was prevented by sufficient cause from filing it on time. Hence, the Ld. Counsel for the assessee prayed for condonation of delay, for which, the Ld.DR objects; taking note of the reasons for delay, we find it adequate to excuse the delay. Hence, we condone the delay of ‘93’ days and proceed to adjudicate both the appeals on merits. First, we will take up appeal for AY 2015 . It is noted that Ground no.1 is general in nature, therefore, it doesn’t require any adjudication. Ground No.2 is regarding disallowance of weighted deduction of Rs.19,78,33/- claimed u/s 35(2AB) since expenditure was not approved by the DSIR in Form 3CL Brief facts are that, the assessee a public limited company filed its Return of Income (in short “RoI\") for AY 2015-16 on 30.11.2015 admitting total income of Rs.27,34,34,800/-. Later, the RoI was selected for scrutiny, and the AO framed the assessment on 30.12.2017 and e of Rs.30,59,75,636/-. The AO noted that, the assessee has claimed an amount of Rs.19,78,332/- by way of weighted deduction u/s. 35(2AB) of the Act. According to the AO, as per section 35(2AB) of the Act, if a company is engaged in any business of 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd At the outset, the Ld. Counsel for the assessee submitted that there is a delay of ‘93’ days in filing of these appeals for the AYs 2015-16 & 17 and that was because assessee was prevented by sufficient cause from filing it on time. Hence, the Ld. Counsel for the assessee prayed for condonation of delay, for which, the Ld.DR objects; however ind it adequate to excuse the delay. Hence, we condone the delay of ‘93’ days and proceed to AY 2015-16 in ITA . It is noted that Ground no.1 is general in nature, Ground No.2 is regarding claimed u/s 35(2AB) not approved by the DSIR in Form 3CL. a public limited company filed its 16 on 30.11.2015 . Later, the RoI was selected for scrutiny, and the AO framed the assessment on 30.12.2017 and . The AO noted that, the by way of weighted deduction u/s. 35(2AB) of the Act. According to the AO, as per section 35(2AB) of the Act, if a company is engaged in any business of biotechnology or of manufacture or production of any article (not being an article or thing specified in 11 (200%) of the expenditure incurred on scientific research shall be allowed as deduction. According to the AO, for claiming deduction u/s. 35(2AB) of the Act, the assessee had to enter into an agreement with the pre authority for co-operation in such research and development facility and the prescribed authority [ Scientific and Industrial Research (DSIR) relation to the approval o the Ld. PCIT or other authorities. However, according to the AO, the assessee did not furnish the approval received in Form 3CL from the DSIR. Therefore, according to him, the assessee was not eligible to deduction u/s. 35(2AB) of the Act. The AO accordingly only allowed the normal deduction for the actual revenue expenditure of Rs.9,89,166/ of total claim of Rs.19,78,332/ Rs.9,89,166/- was disallowed and added to assessee. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A), who was pleased to dismiss the same and confirmed the action of the AO. Aggrieved, the assessee is before us. 4.1 We have heard both the parties and peru undisputed facts are that, the assessee has an approved in facility for which the DSIR has issued approval in Form 3C ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::3 :: hnology or of manufacture or production of any article (not being an article or thing specified in 11th Schedule), an amount equal to two times (200%) of the expenditure incurred on scientific research shall be allowed as deduction. According to the AO, for claiming deduction u/s. 35(2AB) of the Act, the assessee had to enter into an agreement with the pre operation in such research and development facility and the prescribed authority [prescribed authority is Secretary, Department of Scientific and Industrial Research (DSIR)] who shall submit its report in relation to the approval of the expenditure incurred by the said facility to the Ld. PCIT or other authorities. However, according to the AO, the assessee did not furnish the approval received in Form 3CL from the DSIR. Therefore, according to him, the assessee was not eligible to deduction u/s. 35(2AB) of the Act. The AO accordingly only allowed the normal deduction for the actual revenue expenditure of Rs.9,89,166/ claim of Rs.19,78,332/-, and the weighted component of was disallowed and added to the total income of the assessee. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A), who was pleased to dismiss the same and confirmed the action of the AO. Aggrieved, the assessee is before us. We have heard both the parties and perused the records. undisputed facts are that, the assessee has an approved in facility for which the DSIR has issued approval in Form 3C 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd hnology or of manufacture or production of any article (not being an Schedule), an amount equal to two times (200%) of the expenditure incurred on scientific research shall be allowed as deduction. According to the AO, for claiming deduction u/s. 35(2AB) of the Act, the assessee had to enter into an agreement with the prescribed operation in such research and development facility and prescribed authority is Secretary, Department of who shall submit its report in f the expenditure incurred by the said facility to the Ld. PCIT or other authorities. However, according to the AO, the assessee did not furnish the approval received in Form 3CL from the DSIR. Therefore, according to him, the assessee was not eligible to claim deduction u/s. 35(2AB) of the Act. The AO accordingly only allowed the normal deduction for the actual revenue expenditure of Rs.9,89,166/- out , and the weighted component of the total income of the assessee. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A), who was pleased to dismiss the same and confirmed the action sed the records. The undisputed facts are that, the assessee has an approved in-house in R&D facility for which the DSIR has issued approval in Form 3CM vide letter F.No.TU/IV-R-D/743/2012 dated 18.07.2012 us. Further, according to for the R&D facility which has been audited in Form 3CLA. Having regard to the provisions of sub Act, if the aforesaid facts are correct, then three conditions set out therein, for claiming weighted deduction in respect of the expenditure incurred at the in According to the AO however, since the expenditure as set out in 3CLA had not been certif he had denied weighted component of deduction and instead restricted the claim to the actual amount of expenditure. notice that Rule 6 of the Income Tax Rules, 1962 [herein after the Rules],which contained the procedure for obtaining the approval from DSIR, as it stood then, nowhere prescribed that the DSIR was required to certify the quantum of weighted deduction or the amount certified in Form 3CL was to be considered as the sum eli was shown to us that, the above Rule 6 underwent amendment by the Income Tax (10th Amendment) Rules, 2016, wherein sub clause (7A) was amended with effect from 01.07.2016, hence applicable from AY 2017-18and onwa mandated the DSIR to quantify the quantum of deduction allowable u/s.35(2AB)of the Act in Part ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::4 :: D/743/2012 dated 18.07.2012, which letter is placed before ing to the assessee, it is maintaining separate accounts for the R&D facility which has been audited in Form 3CLA. Having regard to the provisions of sub-sub clauses (1) to (4) of Section 35(2AB) of the f the aforesaid facts are correct, then the assessee had satisfied the three conditions set out therein, for claiming weighted deduction in respect of the expenditure incurred at the in-house in R&D facility. According to the AO however, since the expenditure as set out in had not been certified and approved by the DSIR in their Form 3CL, denied weighted component of deduction and instead restricted the claim to the actual amount of expenditure. The Ld. AR brought to our notice that Rule 6 of the Income Tax Rules, 1962 [herein after the Rules],which contained the procedure for obtaining the approval from DSIR, as it stood then, nowhere prescribed that the DSIR was required to certify the quantum of weighted deduction or the amount certified in Form 3CL was to be considered as the sum eligible for weighted deduction. It was shown to us that, the above Rule 6 underwent amendment by the Income Tax (10th Amendment) Rules, 2016, wherein sub clause (7A) was amended with effect from 01.07.2016, hence applicable 18and onwards, in terms of which the mandated the DSIR to quantify the quantum of deduction allowable u/s.35(2AB)of the Act in Part-B Part of Form 3CL. Accordingly the basis 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd , which letter is placed before separate accounts for the R&D facility which has been audited in Form 3CLA. Having regard sub clauses (1) to (4) of Section 35(2AB) of the essee had satisfied the three conditions set out therein, for claiming weighted deduction in house in R&D facility. According to the AO however, since the expenditure as set out in Form ied and approved by the DSIR in their Form 3CL, denied weighted component of deduction and instead restricted The Ld. AR brought to our notice that Rule 6 of the Income Tax Rules, 1962 [herein after the Rules],which contained the procedure for obtaining the approval from DSIR, as it stood then, nowhere prescribed that the DSIR was required to certify the quantum of weighted deduction or the amount certified in Form gible for weighted deduction. It was shown to us that, the above Rule 6 underwent amendment by the Income Tax (10th Amendment) Rules, 2016, wherein sub-clause sub clause (7A) was amended with effect from 01.07.2016, hence applicable rds, in terms of which the Legislature mandated the DSIR to quantify the quantum of deduction allowable Accordingly the basis on which the AO is noted to have denied the deduction, is found to be not applicable in the context of the relevant year in question. position prevailing prior to amendment of the Rule was that, the Form 3CL issued by DSIR was not relevant to ascertain the claim of weighted deduction u/s 35(2AB) of the Act. 4.2 In view of the above requirement to claim weighted deduction u/s 35(2AB), prior to AY 2017 18, was (a) entering into an agreement between the facility and the DSIR and (b) recognition of the R&D facility by DSIR in Form 3CM, these two conditions are met, the expenditure set out in separate audited accounts of the R&D facility i.e. Form 3CLA, will qualify for weighted deduction u/s u 35(2AB) of the Act. We further note that the impugned issue stands squarely covered i rendered by this Tribunal in ITA No.3236/Chny/2017 has been observed as under: 4.3 We note that the assessee has claimed deduction of Rs.14,20,60,668/- and the AO allowed deduction of only Rs.13,52,44,00/ as approved by the DSIR. It is noted that prior to the amendment brought in Rule 6(7A) of the Income Tax Rules, 1962 (hereinafter i ‘the Rules’) w.e.f. 01.07.2016 i.e. from AY 2016 authority had to submit its report in relation to the approval of in facility and development facility in Form 3CL to DG (Income Tax Exemption) within sixty days of its grant amendment, the quantum of expenditure incurred for in development facility by assessee was required to be given by the authority; and since, the year under consideration (i.e. AY 2013 the amendment was not applicable as noted (supra) in the case of ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::5 :: on which the AO is noted to have denied the deduction, is found to be not able in the context of the relevant year in question. position prevailing prior to amendment of the Rule was that, the Form 3CL issued by DSIR was not relevant to ascertain the claim of weighted deduction u/s 35(2AB) of the Act. the above, and in our considered view therefore, the requirement to claim weighted deduction u/s 35(2AB), prior to AY 2017 18, was (a) entering into an agreement between the facility and the DSIR and (b) recognition of the R&D facility by DSIR in Form 3CM, these two conditions are met, the expenditure set out in separate audited accounts of the R&D facility i.e. Form 3CLA, will qualify for weighted deduction u/s u 35(2AB) of the Act. We further note that the impugned issue stands squarely covered in assessee'sfavour by the decision rendered by this Tribunal in the case of M/s.SundaramFasteners Ltd., in ITA No.3236/Chny/2017, wherein, at Para No.4.3 at Page No.12, it has been observed as under: We note that the assessee has claimed deduction of and the AO allowed deduction of only Rs.13,52,44,00/ as approved by the DSIR. It is noted that prior to the amendment brought in Rule 6(7A) of the Income Tax Rules, 1962 (hereinafter i ‘the Rules’) w.e.f. 01.07.2016 i.e. from AY 2016-17, the prescribed authority had to submit its report in relation to the approval of in facility and development facility in Form 3CL to DG (Income Tax Exemption) within sixty days of its granting approval unlike after the amendment, the quantum of expenditure incurred for in-house research & development facility by assessee was required to be given by the authority; and since, the year under consideration (i.e. AY 2013- s not applicable as noted (supra) in the case of 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd on which the AO is noted to have denied the deduction, is found to be not able in the context of the relevant year in question. Hence, the position prevailing prior to amendment of the Rule was that, the Form 3CL issued by DSIR was not relevant to ascertain the claim of weighted in our considered view therefore, the requirement to claim weighted deduction u/s 35(2AB), prior to AY 2017- 18, was (a) entering into an agreement between the facility and the DSIR and (b) recognition of the R&D facility by DSIR in Form 3CM, and once these two conditions are met, the expenditure set out in separate audited accounts of the R&D facility i.e. Form 3CLA, will qualify for weighted deduction u/s u 35(2AB) of the Act. We further note that the impugned n assessee'sfavour by the decision Fasteners Ltd., , wherein, at Para No.4.3 at Page No.12, it We note that the assessee has claimed deduction of and the AO allowed deduction of only Rs.13,52,44,00/- as approved by the DSIR. It is noted that prior to the amendment brought in Rule 6(7A) of the Income Tax Rules, 1962 (hereinafter in short 17, the prescribed authority had to submit its report in relation to the approval of in-house facility and development facility in Form 3CL to DG (Income Tax ing approval unlike after the house research & development facility by assessee was required to be given by the 14) and s not applicable as noted (supra) in the case of Crompton Greaves Ltd., the assessee has rightly contended that amendment was not applicable, and the prescribed authority was not required to quantify the expenditure and had to only give report in relation to the approval of in-house facility and development facility, and therefore, in the absence of any requirement of law, the AO erred in curtailing the expenditure and consequent weighted deduction claimed by assessee. Therefore, the non-approval of the exp disentitle the assessee to make the claim of Rs.14,20,60,668/ relevant year under consideration and hence, the AO couldn’t have disallowed Rs.68,16,668/ the decision of the Tribunal in the case of Crompton Greaves Ltd. (supra), we allow grounds of appeal of the assessee and direct deletion of Rs.68,16,668/-. 4.3 Since the assessee produced the letter F.No.TU/IV-R-D/743/2012 dated 18.07.2012 time, for the interest of justice and fair to AO to examine whether the assessee met the two conditions as stated at para 4.2 (supra) and assessee is directed to produce relevant documents to substantiate the same. And the AO to pass order on this issue in accordance to law after hearing the assessee. therefore allowed for statistical purposes. 5. Ground No. 3 is noted to be against the action of the Ld. CIT(A) confirming the action compete fees holding it to be capital in nature. The assessee has also alternatively claimed that, in case if the non as revenue expenditure, and is treated as capital in nature, then i an event, the AO ought to be directed to allow depreciation thereon by treating the payment as ‘intangible asset’. ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::6 :: Crompton Greaves Ltd., the assessee has rightly contended that amendment was not applicable, and the prescribed authority was not required to quantify the expenditure and had to only give report in relation house facility and development facility, and therefore, in the absence of any requirement of law, the AO erred in curtailing the expenditure and consequent weighted deduction claimed by assessee. approval of the expenditure by the DSIR doesn’t disentitle the assessee to make the claim of Rs.14,20,60,668/- relevant year under consideration and hence, the AO couldn’t have disallowed Rs.68,16,668/-. Therefore, respectfully following the ratio of the Tribunal in the case of Crompton Greaves Ltd. (supra), we allow grounds of appeal of the assessee and direct deletion of Since the assessee produced the DSIRapproval in Form 3C D/743/2012 dated 18.07.2012, before us for the first time, for the interest of justice and fair-play, we set aside this issue back to AO to examine whether the assessee met the two conditions as stated at para 4.2 (supra) and assessee is directed to produce relevant tantiate the same. And the AO to pass order on this issue in accordance to law after hearing the assessee. therefore allowed for statistical purposes. is noted to be against the action of the Ld. CIT(A) confirming the action of the AO in disallowing the payment of non compete fees holding it to be capital in nature. The assessee has also alternatively claimed that, in case if the non-compete fee is not allowed as revenue expenditure, and is treated as capital in nature, then i an event, the AO ought to be directed to allow depreciation thereon by treating the payment as ‘intangible asset’. 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd Crompton Greaves Ltd., the assessee has rightly contended that amendment was not applicable, and the prescribed authority was not required to quantify the expenditure and had to only give report in relation house facility and development facility, and therefore, in the absence of any requirement of law, the AO erred in curtailing the expenditure and consequent weighted deduction claimed by assessee. enditure by the DSIR doesn’t - in the relevant year under consideration and hence, the AO couldn’t have . Therefore, respectfully following the ratio of the Tribunal in the case of Crompton Greaves Ltd. (supra), we allow grounds of appeal of the assessee and direct deletion of DSIRapproval in Form 3CM vide before us for the first set aside this issue back to AO to examine whether the assessee met the two conditions as stated at para 4.2 (supra) and assessee is directed to produce relevant tantiate the same. And the AO to pass order on this issue in accordance to law after hearing the assessee. This ground is is noted to be against the action of the Ld. CIT(A) of the AO in disallowing the payment of non- compete fees holding it to be capital in nature. The assessee has also compete fee is not allowed as revenue expenditure, and is treated as capital in nature, then in such an event, the AO ought to be directed to allow depreciation thereon by 5.1 Brief facts as noted are that, the assessee has debited miscellaneous expenses of Rs.3,13,24,374/ for the year ended 31.03.2015. The AO is noted to breakup of the details of the expenditure; and upon examining the details, the AO noted that, the assessee has debited sum of Rs.2,37,07,960/- paid by way of non ‘miscellaneous expenses’ and therefore, the AO required the assessee to submit the details of the same. On perusal of the details, the AO noted that the assessee has agreed to pay non (1) M/s. JSK Marketing Pvt Ltd (in shor Consumer Products Pvt Ltd (in short “M/s.RAL”). The AO noted that these two companies were respectively controlled by (100% shareholding) directors/promoters of assessee company viz., Shri. Kunal K. Jiwaraka and Shri. Rajendra Prasad Khaitan. According to the AO, an agreement dated 14.08.2014 has been entered into by the assessee company with the promoters/directors in respect of both M/s. JSK and M/s. RAL for not competing with the assessee company; and in lieu of it, assess to pay such non-compete fee amounting to Rs.2,37,07,960/ expense, according to AO needs to be capitalized in the books of accounts of the assessee. According to him, any payment for acquiring business or commercial rights would fall unde Further, according to the AO, the assessee had entered into non ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::7 :: Brief facts as noted are that, the assessee has debited miscellaneous expenses of Rs.3,13,24,374/- in the Profit & Loss Account for the year ended 31.03.2015. The AO is noted to have called breakup of the details of the expenditure; and upon examining the details, the AO noted that, the assessee has debited sum of paid by way of non-compete fees under the h ‘miscellaneous expenses’ and therefore, the AO required the assessee to submit the details of the same. On perusal of the details, the AO noted that the assessee has agreed to pay non-compete fee to two companies (1) M/s. JSK Marketing Pvt Ltd (in short “M/s.JSK”) and (2) M/s. RAL Consumer Products Pvt Ltd (in short “M/s.RAL”). The AO noted that these two companies were respectively controlled by (100% shareholding) directors/promoters of assessee company viz., Shri. Kunal K. Jiwaraka a Prasad Khaitan. According to the AO, an agreement dated 14.08.2014 has been entered into by the assessee company with the promoters/directors in respect of both M/s. JSK and M/s. RAL for not competing with the assessee company; and in lieu of it, assess compete fee amounting to Rs.2,37,07,960/ expense, according to AO needs to be capitalized in the books of accounts of the assessee. According to him, any payment for acquiring business or commercial rights would fall under the definition of intangible assets. Further, according to the AO, the assessee had entered into non 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd Brief facts as noted are that, the assessee has debited in the Profit & Loss Account have called for the breakup of the details of the expenditure; and upon examining the details, the AO noted that, the assessee has debited sum of compete fees under the head ‘miscellaneous expenses’ and therefore, the AO required the assessee to submit the details of the same. On perusal of the details, the AO noted compete fee to two companies t “M/s.JSK”) and (2) M/s. RAL Consumer Products Pvt Ltd (in short “M/s.RAL”). The AO noted that these two companies were respectively controlled by (100% shareholding) directors/promoters of assessee company viz., Shri. Kunal K. Jiwaraka a Prasad Khaitan. According to the AO, an agreement dated 14.08.2014 has been entered into by the assessee company with the promoters/directors in respect of both M/s. JSK and M/s. RAL for not competing with the assessee company; and in lieu of it, assessee agreed compete fee amounting to Rs.2,37,07,960/-, which expense, according to AO needs to be capitalized in the books of accounts of the assessee. According to him, any payment for acquiring business or r the definition of intangible assets. Further, according to the AO, the assessee had entered into non-compete agreement to avoid competition in terms of which it acquired valuable rights from the Directors by preventing them from directly or indirectly competing in the same line of business. This in AO’s view came under the definition of commercial right having economic interest and money value. Hence, according to the AO, the non business or commercial rights of similar n that the payment of non nature and hence disallowed the same. 5.2 After holding so, the AO also disallowed the alternative claim of the assessee for depreciation on such capital expen opinion that depreciation is allowable only if the the following conditions: (i) a technical feasibility study supporting the completion of development of the intangible asset (ii) ability to use or sell the created intangible asset (iii) existence of market for output of the intangible asset or internal use of the intangible asset (iv) availability of adequate technical, financial, and other resources to complete the development and to use or sell the in (v) ability to measure the expenditure on the intangible asset reliably and fairly. 5.3 According to the AO, the assessee did not satisfy the aforesaid conditions and also noted that the advantage gained by the assessee was for a restricted period (as per Schedule 1 of the agreement). He thus observed that, the payment did ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::8 :: agreement to avoid competition in terms of which it acquired valuable rights from the Directors by preventing them from directly or indirectly ompeting in the same line of business. This in AO’s view came under the definition of commercial right having economic interest and money value. Hence, according to the AO, the non-compete fee is in the nature of business or commercial rights of similar nature. The AO therefore held that the payment of non-compete fee was not revenue but capital in nature and hence disallowed the same. After holding so, the AO also disallowed the alternative claim of the assessee for depreciation on such capital expenditure. The AO was of the opinion that depreciation is allowable only if the intangible asset the following conditions: (i) a technical feasibility study supporting the completion of development of the the created intangible asset (iii) existence of market for output of the intangible asset or internal use of the (iv) availability of adequate technical, financial, and other resources to complete the development and to use or sell the intangible asset (v) ability to measure the expenditure on the intangible asset reliably and fairly. According to the AO, the assessee did not satisfy the aforesaid conditions and also noted that the advantage gained by the assessee was period (as per Schedule 1 of the agreement). He thus observed that, the payment didn’t necessarily confer any exclusive right 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd agreement to avoid competition in terms of which it acquired valuable rights from the Directors by preventing them from directly or indirectly ompeting in the same line of business. This in AO’s view came under the definition of commercial right having economic interest and money value. compete fee is in the nature of ature. The AO therefore held compete fee was not revenue but capital in After holding so, the AO also disallowed the alternative claim of the diture. The AO was of the intangible asset satisfies (i) a technical feasibility study supporting the completion of development of the (iii) existence of market for output of the intangible asset or internal use of the (iv) availability of adequate technical, financial, and other resources to complete (v) ability to measure the expenditure on the intangible asset reliably and fairly. According to the AO, the assessee did not satisfy the aforesaid conditions and also noted that the advantage gained by the assessee was period (as per Schedule 1 of the agreement). He thus t necessarily confer any exclusive right to carry on primary business activity. According to him, asset cannot be sold independently unlike other intangi form of knowhow, franchise rights, license etc. Hence according to him, the same cannot be treated as an intangible asset as defined under the Act and hence the corresponding claim of depreciation was denied. Aggrieved, the assessee pre confirmed the action of the AO by holding as under: “19. Regarding ground of disallowance of non the appellant has countered the case laws relied uponby the AO. The appellant submitted that in the case of Pent Court (2008) did not adjudicate as revenueexpenditure or not. Further, the decision of ITAT in the cases of RealImage Tech (P) Ltd. an depreciation on non-compete fee and not the nature of expenditure.The appellant further relied upon Hon'ble Madras High Court case ofHatsunAgro Products Ltd. vs. JCIT (407 ITR 674) (2017) and Hon'blePunjab case of CIT Vs. Max India Ltd.(2018), where non employee restraininghim from doing particular business. 20. However, in the instant case, the AQ has made clear cut findingthat here promoter director's interest is invòlved. The agreement of theappellant company was made with its promoter director ShriKunal K.Jiwarka and Mr. Rajendra Prasad Khaitan.(Such payment would fallunder the nature of enduring benefit. The appellant avoided competitionwi and hence, it being acommercial right having monetary value and long term bearing. In thisregard, reliance is placed on rationale held in the cases of: - Revathi Equipment Ltd. vs. ACIT (Madras High Court) 129 (2021)- AO held the portion of fee as capital in nature and reopening the case was held justified. In the instant case of the appellant, the entire issued related to wholesale dealership is subjected to non - ITO Vs. Smartchem granted against the High Court's order. - GKN Driveline India Ltd. vs. CIT 88 taxmann.com 208 (Delhi) (2017) Payments were held for an enduring benefit and not non regarding agreement for - NELITO Systems Ltd. vs. DCIT 27 taxmann.com 201 (Mum non-compete fee is a capital expenditure not allowable u/s37(1). ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::9 :: to carry on primary business activity. According to him, cannot be sold independently unlike other intangible assets in the form of knowhow, franchise rights, license etc. Hence according to him, the same cannot be treated as an intangible asset as defined under the Act and hence the corresponding claim of depreciation was denied. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A), who confirmed the action of the AO by holding as under: “19. Regarding ground of disallowance of non-compete fee of Rs.2.37,07,960/, the appellant has countered the case laws relied uponby the AO. The appellant ted that in the case of PentasoftTechnologies, the Hon'ble Madras High adjudicate on the question of allowability of non-compete fee as revenueexpenditure or not. Further, the decision of ITAT in the cases of RealImage Tech (P) Ltd. and Indo Global Corporate Finance dealt the issueof compete fee and not the nature of expenditure.The appellant further relied upon Hon'ble Madras High Court case ofHatsunAgro Products Ltd. vs. JCIT (407 ITR 674) (2017) and Hon'blePunjab and Haryana High Court in the case of CIT Vs. Max India Ltd.(2018), where non-compete fee was a paid to a ex employee restraininghim from doing particular business. 20. However, in the instant case, the AQ has made clear cut findingthat here director's interest is invòlved. The agreement of theappellant company was made with its promoter director ShriKunal K.Jiwarka and Mr. Rajendra Prasad Khaitan.(Such payment would fallunder the nature of enduring benefit. The appellant avoided competitionwith the directors regarding wholesale dealership and hence, it being acommercial right having monetary value and long term bearing. In thisregard, reliance is placed on rationale held in the cases of: Revathi Equipment Ltd. vs. ACIT (Madras High Court) 129 taxmann. com 382 AO held the portion of fee as capital in nature and reopening the case was held justified. In the instant case of the appellant, the entire issued related to wholesale dealership is subjected to non-compete fee. ITO Vs. Smartchem Technologies Ltd. 103 taxmann.com 360 (SC) granted against the High Court's order. GKN Driveline India Ltd. vs. CIT 88 taxmann.com 208 (Delhi) (2017) Payments were held for an enduring benefit and not non-competeobligation regarding agreement for purchase of assets and liabilitiesof a new factory. NELITO Systems Ltd. vs. DCIT 27 taxmann.com 201 (Mum-/TAT)(2012) compete fee is a capital expenditure not allowable u/s37(1). 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd to carry on primary business activity. According to him, this intangible ble assets in the form of knowhow, franchise rights, license etc. Hence according to him, the same cannot be treated as an intangible asset as defined under the Act and hence the corresponding claim of depreciation was denied. ferred an appeal before the Ld.CIT(A), who Rs.2.37,07,960/, the appellant has countered the case laws relied uponby the AO. The appellant softTechnologies, the Hon'ble Madras High compete fee as revenueexpenditure or not. Further, the decision of ITAT in the cases of d Indo Global Corporate Finance dealt the issueof compete fee and not the nature of expenditure.The appellant further relied upon Hon'ble Madras High Court case ofHatsunAgro Products Ltd. and Haryana High Court in the compete fee was a paid to a ex- 20. However, in the instant case, the AQ has made clear cut findingthat here director's interest is invòlved. The agreement of theappellant company was made with its promoter director ShriKunal K.Jiwarka and Mr. Rajendra Prasad Khaitan.(Such payment would fallunder the nature of enduring benefit. The th the directors regarding wholesale dealership and hence, it being acommercial right having monetary value and long term bearing. In thisregard, reliance is placed on rationale held in the cases of:- taxmann. com 382 AO held the portion of fee as capital in nature and reopening the case was held justified. In the instant case of the appellant, the entire issued Technologies Ltd. 103 taxmann.com 360 (SC) –SLP was GKN Driveline India Ltd. vs. CIT 88 taxmann.com 208 (Delhi) (2017)- competeobligation purchase of assets and liabilitiesof a new factory. /TAT)(2012) - 21. Further, there is no question of allowability of depreciation on non fee as it has no independent value or advantage of fetchingany price in the market unlike intangible assets like know appellant on said non-complete fee was rightlyrejected by relying upon Delhi High Court case of Sharp BusinessSystems and ITAT decision in the case of Gujarat Glass Ltd. dated05.04.2013. Hence, ground no. 2of the appellant is dismissed. 5.4 Aggrieved by the aforesaid action of the Ld.CIT(A), the assessee is before us. 5.5 Assailing the actio first took us through the background facts leading to the impugned non compete agreement between the assessee and M/s JSK & M/s RAL. It was brought to our notice that, the assessee had two promoter directors Kunal K Jiwarajkaand Shri 9.12% equity stake in the assessee company respectively. He submitted that, these two directors held 100% stake in the companies M/s JSK & M/s RAL which distributed the Indian States. According to him, during the relevant year, the assessee had intended to take over the distribution networks in certain areas where these two companies were already operating. Having regard to the fact that, the distribution network of remaining areas would continue under them, and given their expertise and access to company’s confidential information, it was mutually agreed to enter into a non agreement in terms of which M/s JSK & M/s RAL would give up distribution networks in certain areas, which was defined as ‘Discontinued Territories’ and would retain the distribution business for remaining areas ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::10 :: 21. Further, there is no question of allowability of depreciation on non fee as it has no independent value or advantage of fetchingany price in the market unlike intangible assets like know-how, etc. andthus depreciation claim of complete fee was rightlyrejected by relying upon Delhi High case of Sharp BusinessSystems and ITAT decision in the case of Gujarat Glass Ltd. dated05.04.2013. Hence, ground no. 2of the appellant is dismissed. Aggrieved by the aforesaid action of the Ld.CIT(A), the assessee is Assailing the action of the Ld. CIT(A), the Ld. AR for the assessee first took us through the background facts leading to the impugned non compete agreement between the assessee and M/s JSK & M/s RAL. It was brought to our notice that, the assessee had two promoter directors Shri Rajendra Prasad Khaitan who held equity stake in the assessee company respectively. He submitted that, these two directors held 100% stake in the companies M/s JSK & which distributed the assessee company’s products in various . According to him, during the relevant year, the assessee had intended to take over the distribution networks in certain areas where these two companies were already operating. Having regard to the fact e distribution network of remaining areas would continue under them, and given their expertise and access to company’s confidential information, it was mutually agreed to enter into a non agreement in terms of which M/s JSK & M/s RAL would give up distribution networks in certain areas, which was defined as ‘Discontinued Territories’ and would retain the distribution business for remaining areas 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd 21. Further, there is no question of allowability of depreciation on non-complete fee as it has no independent value or advantage of fetchingany price in the how, etc. andthus depreciation claim of complete fee was rightlyrejected by relying upon Delhi High case of Sharp BusinessSystems and ITAT decision in the case of Gujarat Glass Ltd. dated05.04.2013. Hence, ground no. 2of the appellant is dismissed.” Aggrieved by the aforesaid action of the Ld.CIT(A), the assessee is n of the Ld. CIT(A), the Ld. AR for the assessee first took us through the background facts leading to the impugned non- compete agreement between the assessee and M/s JSK & M/s RAL. It was brought to our notice that, the assessee had two promoter directors, Shri held 9.95% and equity stake in the assessee company respectively. He submitted that, these two directors held 100% stake in the companies M/s JSK & company’s products in various . According to him, during the relevant year, the assessee had intended to take over the distribution networks in certain areas where these two companies were already operating. Having regard to the fact e distribution network of remaining areas would continue under them, and given their expertise and access to company’s confidential information, it was mutually agreed to enter into a non-compete agreement in terms of which M/s JSK & M/s RAL would give up their distribution networks in certain areas, which was defined as ‘Discontinued Territories’ and would retain the distribution business for remaining areas known as ‘Continuing Territories’. It was also agreed that M/s JSK & M/s RAL would abstain from car specified period in the ‘Discontinued Territories assessee agreed to pay lump sum consideration by way of non fee of Rs.2,37,07,960/ compete fee didn’t alter the assessee’s capital structure and was therefore revenue in nature. He further submitted that the decisions relied upon by the lower authorities to treat the impugned payment as capital in nature was distinguishable and decision of Hon’ble Madras High Court in the case of Products Ltd vs JCIT (407 ITR 674) payment was allowed as revenue expenditure. Alternatively, the Ld. AR claimed that, given the fact that both the l payment to be in nature of acquisition of valuable commercial rights, it fell within the definition of ‘asset’ as set out in Section 2(11) of the Act and therefore the assessee ought to be allowed depreciation on the same. Per contra, the Ld. CIT, DR supported the order of the lower authorities. 5.6 Heard both the parties disallowance made on the claim of expenditure made towards payment of non-compete fees, we note that AO/ genuineness of the impugned payment made to two promoters concerns ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::11 :: known as ‘Continuing Territories’. It was also agreed that M/s JSK & M/s RAL would abstain from carrying out any distribution activities for specified period in the ‘Discontinued Territories’ and for doing so, the assessee agreed to pay lump sum consideration by way of non fee of Rs.2,37,07,960/-. According to Ld. AR, the payment of non t alter the assessee’s capital structure and was therefore revenue in nature. He further submitted that the decisions relied upon by the lower authorities to treat the impugned payment as capital in nature was distinguishable and instead, he relie decision of Hon’ble Madras High Court in the case of M/s.HatsunAgro Products Ltd vs JCIT (407 ITR 674) wherein the non payment was allowed as revenue expenditure. Alternatively, the Ld. AR claimed that, given the fact that both the lower authorities had held the payment to be in nature of acquisition of valuable commercial rights, it fell within the definition of ‘asset’ as set out in Section 2(11) of the Act and therefore the assessee ought to be allowed depreciation on same. Per contra, the Ld. CIT, DR supported the order of the lower Heard both the parties, and before we enter in to the merits of the disallowance made on the claim of expenditure made towards payment of compete fees, we note that AO/Ld CIT(A) has not questioned the genuineness of the impugned payment made to two promoters concerns 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd known as ‘Continuing Territories’. It was also agreed that M/s JSK & M/s rying out any distribution activities for for doing so, the assessee agreed to pay lump sum consideration by way of non-compete . According to Ld. AR, the payment of non- t alter the assessee’s capital structure and was therefore revenue in nature. He further submitted that the decisions relied upon by the lower authorities to treat the impugned payment as he relied upon the M/s.HatsunAgro wherein the non-compete fee payment was allowed as revenue expenditure. Alternatively, the Ld. AR ower authorities had held the payment to be in nature of acquisition of valuable commercial/business rights, it fell within the definition of ‘asset’ as set out in Section 2(11) of the Act and therefore the assessee ought to be allowed depreciation on same. Per contra, the Ld. CIT, DR supported the order of the lower , and before we enter in to the merits of the disallowance made on the claim of expenditure made towards payment of Ld CIT(A) has not questioned the genuineness of the impugned payment made to two promoters concerns M/s JSK & M/s RALand therefore, our adjudication of the grounds raised is confined to the impugned actions of AO/Ld CIT(A) of this ground, we note business of manufacture and distribution of batterie Kunal K Jiwarajkaand Shri 9.95% & 9.12% of equity in the assessee been brought to our notice that, the batteries manufactured by the assessee were being distributed by M/s JSK & M/s RAL, both of which are wholly owned and controlled by Shri Prasad Khaitan. As noted from the assessee intended to undertake the distribution activity also by itself and had thus proposed to venture into specified locations wherein it would distribute their manufactured batteries. Since M/s JSK & M/s RAL were already established distribution players access to confidential information, the assessee, is noted to have entered into a non-compete agreement in terms of which essentially gave up their distribution activity for a specified period to the assessee carrying on the business of distribution of batteries in the said specified areas. The relevant terms of the non examined and it is observed that the assessee had paid a lumpsum consideration to acquire valuable commercial right viz., distribution ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::12 :: and therefore, our adjudication of the grounds raised is confined to the impugned actions of AO/Ld CIT(A). Coming to the merits note that, the assessee company is engaged in the business of manufacture and distribution of batteries, promoted by Shri Shri Rajendra Prasad Khaitan, both of whom held 9.95% & 9.12% of equity in the assessee company respecti brought to our notice that, the batteries manufactured by the assessee were being distributed by M/s JSK & M/s RAL, both of which are wholly owned and controlled by Shri Kunal K Jiwarajkaand . As noted from the material placed on record, the assessee intended to undertake the distribution activity also by itself and had thus proposed to venture into specified locations wherein it would distribute their manufactured batteries. Since M/s JSK & M/s RAL were established distribution players, having significant expertise and access to confidential information, the assessee, is noted to have entered compete agreement in terms of which, M/s JSK & M/s RAL essentially gave up their distribution activity rights in the specified areas for a specified period to the assessee, and also agreed to refrain from carrying on the business of distribution of batteries in the said specified areas. The relevant terms of the non-compete agreement have been it is observed that the assessee had paid a lumpsum consideration to acquire valuable commercial right viz., distribution 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd and therefore, our adjudication of the grounds raised is Coming to the merits that, the assessee company is engaged in the promoted by Shri , both of whom held respectively. It has brought to our notice that, the batteries manufactured by the assessee were being distributed by M/s JSK & M/s RAL, both of which are Kunal K Jiwarajkaand Shri Rajendra material placed on record, the assessee intended to undertake the distribution activity also by itself and had thus proposed to venture into specified locations wherein it would distribute their manufactured batteries. Since M/s JSK & M/s RAL were significant expertise and access to confidential information, the assessee, is noted to have entered M/s JSK & M/s RAL rights in the specified areas and also agreed to refrain from carrying on the business of distribution of batteries in the said specified compete agreement have been it is observed that the assessee had paid a lumpsum consideration to acquire valuable commercial right viz., distribution right/network in specified areas from M/s JSK & M/s RAL and at the same time abstaining them to conduct the same business activity in so as to eliminate competition and obtain an enduring benefit across the specified period in the course of business. On these facts, we agree with the AO that, by payment of non valuable commercial & busine company and therefore the impugned payment was capital in nature. For this, we gainfully refer to the decision of Special Bench of this Tribunal in the case of Tecumseh India Pvt Ltd Vs Addl. CIT (127 ITD 1) wherein it was held that payment of non nature. The observations of this Tribunal relevant to the facts of the present case are as follows: 128. Ld. Counsel appearing on behalf of the assessee has distinguished the decision in th grounds that in that case the right acquired by the assessee was to carry on its business unfettered by any competition from outsider within the area, but in the case of the assessee there were several and what the assessee had got only the non one party, namely, \"Whirlpool India\" from which it had purchased the manufacturing related facilities. This proposition of the assessee also cannot be accepted as it is not neces acquire monopoly rights while warding off the competition. Reference in this regard can be made to the following observations of Hon'ble Supreme Court from the decision in the case of Coal Shipment (P.) Ltd. (supra) where it w made to ward off competition in business to a rival dealer would constitute capital expenditure : \"Although we agree that payment made to ward off competition in business to a rival dealer would constitute the object of making that payment is to derive an advantage by eliminating the competition over some length of time, the same ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::13 :: right/network in specified areas from M/s JSK & M/s RAL and at the same time abstaining them to conduct the same business activity in so as to eliminate competition and obtain an enduring benefit across the specified period in the course of business. On these facts, we agree with the AO that, by payment of non-compete fee, the assessee had acquired valuable commercial & business rights resulting in enduring benefit to the company and therefore the impugned payment was capital in nature. For this, we gainfully refer to the decision of Special Bench of this Tribunal in Tecumseh India Pvt Ltd Vs Addl. CIT (127 ITD 1) herein it was held that payment of non-compete fees is capital in nature. The observations of this Tribunal relevant to the facts of the present case are as follows:- 128. Ld. Counsel appearing on behalf of the assessee has distinguished the decision in the case of Assam Bengal Cement Co. Ltd. (supra) on the grounds that in that case the right acquired by the assessee was to carry on its business unfettered by any competition from outsider within the area, but in the case of the assessee there were several and what the assessee had got only the non-compete agreement from one party, namely, \"Whirlpool India\" from which it had purchased the manufacturing related facilities. This proposition of the assessee also cannot be accepted as it is not necessary that the assessee should acquire monopoly rights while warding off the competition. Reference in this regard can be made to the following observations of Hon'ble Supreme Court from the decision in the case of Coal Shipment (P.) Ltd. (supra) where it was observed that even in a case where payment is made to ward off competition in business to a rival dealer would constitute capital expenditure :— \"Although we agree that payment made to ward off competition in business to a rival dealer would constitute capital expenditure if the object of making that payment is to derive an advantage by eliminating the competition over some length of time, the same 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd right/network in specified areas from M/s JSK & M/s RAL and at the same time abstaining them to conduct the same business activity in that area so as to eliminate competition and obtain an enduring benefit across the specified period in the course of business. On these facts, we agree with compete fee, the assessee had acquired ss rights resulting in enduring benefit to the company and therefore the impugned payment was capital in nature. For this, we gainfully refer to the decision of Special Bench of this Tribunal in Tecumseh India Pvt Ltd Vs Addl. CIT (127 ITD 1) compete fees is capital in nature. The observations of this Tribunal relevant to the facts of the 128. Ld. Counsel appearing on behalf of the assessee has distinguished e case of Assam Bengal Cement Co. Ltd. (supra) on the grounds that in that case the right acquired by the assessee was to carry on its business unfettered by any competition from outsider within the area, but in the case of the assessee there were several competitors compete agreement from one party, namely, \"Whirlpool India\" from which it had purchased the manufacturing related facilities. This proposition of the assessee also sary that the assessee should acquire monopoly rights while warding off the competition. Reference in this regard can be made to the following observations of Hon'ble Supreme Court from the decision in the case of Coal Shipment (P.) Ltd. as observed that even in a case where payment is made to ward off competition in business to a rival dealer would \"Although we agree that payment made to ward off competition in capital expenditure if the object of making that payment is to derive an advantage by eliminating the competition over some length of time, the same result would not follow if there is no certainty of the duration of the advantage and the same can be put t How long the period of contemplated advantage should be in order to constitute enduring benefit would depend upon the circumstances and the facts of each individual case.\" 129. According to above observations it can be seen that wardi competition in business even to a rival dealer will constitute capital expenditure and to hold them capital expenditure it is not necessary that non-compete fee is paid to create monopoly rights. … 131. With these observations we hold that the expen crores claimed by the assessee in pursuance of non dated 10-7-1997 are capital expenditure, the deduction of which cannot be granted to the assessee as revenue expenditure. The main issue is decided against the assessee 5.7 Applying the ratio decidendi laid down in the decision (supra) to the present case, it is noted that the tenure of the non between the assessee and M/s JSK & M/s RAL has been defined in Schedule 1 to the agreement, which is extracted below: \"Restricted Period\" shall commence from the Implementation Date and shall continue as follows: 1.19.1, Till the time undertaking Parties continue as authorised wholesale dealer in the JSK Continued Territory 1.19.2 In the event Undertaking Pai wholesale dealer in the JSK Continued Territory on its own accord without duress from the Company, then till the period of 2 years from the Implementation Date'; 1.19.3 In the event the dealership of the Undertaking Parties in the JSK Continued Territory then up to the date of such discontinuation\". …… \"Restricted Period\" shall commence from the Implementation Date and shall continue as follows: ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::14 :: result would not follow if there is no certainty of the duration of the advantage and the same can be put to an end at any time. How long the period of contemplated advantage should be in order to constitute enduring benefit would depend upon the circumstances and the facts of each individual case.\" 129. According to above observations it can be seen that wardi competition in business even to a rival dealer will constitute capital expenditure and to hold them capital expenditure it is not necessary that compete fee is paid to create monopoly rights. 131. With these observations we hold that the expenditure of Rs. 2.65 crores claimed by the assessee in pursuance of non-compete agreement 1997 are capital expenditure, the deduction of which cannot be granted to the assessee as revenue expenditure. The main issue is decided against the assessee and in favour of the revenue. Applying the ratio decidendi laid down in the decision (supra) to the present case, it is noted that the tenure of the non-compete agreement between the assessee and M/s JSK & M/s RAL has been defined in the agreement, which is extracted below:- \"Restricted Period\" shall commence from the Implementation Date and shall continue as follows: 1.19.1, Till the time undertaking Parties continue as authorised wholesale dealer in the JSK Continued Territory In the event Undertaking Pai-ties discontinue to act as authorised wholesale dealer in the JSK Continued Territory on its own accord without duress from the Company, then till the period of 2 years from the Implementation Date'; 1.19.3 In the event the Company discontinues the authorised wholesale dealership of the Undertaking Parties in the JSK Continued Territory then up to the date of such discontinuation\". \"Restricted Period\" shall commence from the Implementation Date and shall s: 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd result would not follow if there is no certainty of the duration of o an end at any time. How long the period of contemplated advantage should be in order to constitute enduring benefit would depend upon the 129. According to above observations it can be seen that warding off competition in business even to a rival dealer will constitute capital expenditure and to hold them capital expenditure it is not necessary that diture of Rs. 2.65 compete agreement 1997 are capital expenditure, the deduction of which cannot be granted to the assessee as revenue expenditure. The main issue is and in favour of the revenue. Applying the ratio decidendi laid down in the decision (supra) to the compete agreement between the assessee and M/s JSK & M/s RAL has been defined in \"Restricted Period\" shall commence from the Implementation Date and shall 1.19.1, Till the time undertaking Parties continue as authorised wholesale dealer ties discontinue to act as authorised wholesale dealer in the JSK Continued Territory on its own accord without duress from the Company, then till the period of 2 years from the Company discontinues the authorised wholesale dealership of the Undertaking Parties in the JSK Continued Territory then up to \"Restricted Period\" shall commence from the Implementation Date and shall 1.20.1 till the time RPK continues as the managing director of the company and undertaking parties continue as authorized wholesale dealer in the RAL continued Territory; 1.20.1.1 In the event Undertaking RPK resigns as joint managing director of the Company on his own accord without duress from the Company, then till such time the Undertaking Parties continue as authorised wholesale dealer in the RAL Continued Territory, 1.20.1.2 In the event Undertaking Parties discontinue to act as authorized wholesale dealer in the RAL Continued Territory on its own accord without duress from the Company, then till such time RPK continues as the joint managing director of the Company; 1.20,1.3 In the event RPK resigns as the joint Managing Director of the Company on his own accord without duress from the Company and Undertaking Parties discontinue to act as authorised wholesale dealer in the RAL Continued territory on its own accord without duress from the Company, then till the period of 2 years from the Implementati 1.20.2 In the event the Company discontinued the authorised wholesale dealership of the Undertaking Parties in the RAL Continued Territory OR removes RPK as joint managing director of the Company then up to the date of such removal or discontinuat 5.8 From the above it is noted, the period of non specifically defined in the agreement and that, it may very well exceed the period of five years as stipulated by the Hon’ble Supreme Court in the case of Assam Bengal Cement Co. Lt (SC) wherein their Lordships have considered the period of five years as providing an enduring advantage to the assessee that the payment was to be made annually. therefore, the ratio laid down in the above decision of the Special Bench (supra) would be applicable to the facts of the present case. 5.9 The decision of HatsunAgro Products Ltd vs JCIT (supra) upon by the assessee is found to be distinguishable on facts as in th ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::15 :: 1.20.1 till the time RPK continues as the managing director of the company and undertaking parties continue as authorized wholesale dealer in the RAL continued Territory; 1.20.1.1 In the event Undertaking RPK resigns as joint managing director of the ompany on his own accord without duress from the Company, then till such time the Undertaking Parties continue as authorised wholesale dealer in the RAL Continued Territory, 1.20.1.2 In the event Undertaking Parties discontinue to act as authorized le dealer in the RAL Continued Territory on its own accord without duress from the Company, then till such time RPK continues as the joint managing director of the Company; 1.20,1.3 In the event RPK resigns as the joint Managing Director of the his own accord without duress from the Company and Undertaking Parties discontinue to act as authorised wholesale dealer in the RAL Continued territory on its own accord without duress from the Company, then till the period of 2 years from the Implementation date; 1.20.2 In the event the Company discontinued the authorised wholesale dealership of the Undertaking Parties in the RAL Continued Territory OR removes RPK as joint managing director of the Company then up to the date of such removal or discontinuation. From the above it is noted, the period of non-compete fees is not specifically defined in the agreement and that, it may very well exceed the period of five years as stipulated by the Hon’ble Supreme Court in the Assam Bengal Cement Co. Ltd. v. CIT [1955] 27 ITR 34 wherein their Lordships have considered the period of five years as providing an enduring advantage to the assessee, irrespective of the fact that the payment was to be made annually. In our considered view tio laid down in the above decision of the Special Bench (supra) would be applicable to the facts of the present case. HatsunAgro Products Ltd vs JCIT (supra) upon by the assessee is found to be distinguishable on facts as in th 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd 1.20.1 till the time RPK continues as the managing director of the company and undertaking parties continue as authorized wholesale dealer in the RAL 1.20.1.1 In the event Undertaking RPK resigns as joint managing director of the ompany on his own accord without duress from the Company, then till such time the Undertaking Parties continue as authorised wholesale dealer in the RAL 1.20.1.2 In the event Undertaking Parties discontinue to act as authorized le dealer in the RAL Continued Territory on its own accord without duress from the Company, then till such time RPK continues as the joint 1.20,1.3 In the event RPK resigns as the joint Managing Director of the his own accord without duress from the Company and Undertaking Parties discontinue to act as authorised wholesale dealer in the RAL Continued territory on its own accord without duress from the Company, then till the period 1.20.2 In the event the Company discontinued the authorised wholesale dealership of the Undertaking Parties in the RAL Continued Territory OR removes RPK as joint managing director of the Company then up to the date of such compete fees is not specifically defined in the agreement and that, it may very well exceed the period of five years as stipulated by the Hon’ble Supreme Court in the d. v. CIT [1955] 27 ITR 34 wherein their Lordships have considered the period of five years as irrespective of the fact In our considered view tio laid down in the above decision of the Special Bench (supra) would be applicable to the facts of the present case. HatsunAgro Products Ltd vs JCIT (supra) relied upon by the assessee is found to be distinguishable on facts as in this judgment, the non-compete fees was paid to the employee were leaving the company their competitors. In the present case however, the Ld. AR for the assessee has specifically pointed out that, t paid to Shri Kunal K Jiwarajkaand has been paid to companies, M/s JSK & M/s RAL who were engaged in distribution of batteries and that the payment made was towards acquisition of their distribution rights/network in specified locations along with their agreement to abstain for operating their business in those specified areas. 5.10 Moreover, we find the decision of the Hon’ble jurisdictional Madras High Court in the case of taxmann.com 120) to be relevant wherein non-compete fees to be capital in nature. We further note that the Hon’ble jurisdictional Madras High Court in their latest judgment in the case of CIT Vs Areva dated 25.03.2021 wherein also the non acquisition of business rights from two running companies was upheld to be capital in nature. 5.11 In view of the above decisions (supra), we uphold the ord lower authorities to the extent holding the payment of non ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::16 :: compete fees was paid to the employee were leaving the company, so as to ensure that they did their competitors. In the present case however, the Ld. AR for the assessee has specifically pointed out that, the non-compete fees was not Kunal K Jiwarajkaand Shri Rajendra Prasad Khaitan has been paid to companies, M/s JSK & M/s RAL who were engaged in distribution of batteries and that the payment made was towards tribution rights/network in specified locations along with their agreement to abstain for operating their business in those we find the decision of the Hon’ble jurisdictional Madras High Court in the case of Pentasoft Technologies Ltd Vs DCIT (41 to be relevant whereinon similar facts had held the compete fees to be capital in nature. We further note that the Hon’ble jurisdictional Madras High Court in their latest judgment in the CIT Vs Areva T & D India Ltd [TS-231-HC wherein also the non-compete fees paid for acquisition of business rights from two running companies was upheld to In view of the above decisions (supra), we uphold the ord lower authorities to the extent holding the payment of non 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd compete fees was paid to the employee-directors who so as to ensure that they didn’t join any of their competitors. In the present case however, the Ld. AR for the compete fees was not Rajendra Prasad Khaitan. Rather it has been paid to companies, M/s JSK & M/s RAL who were engaged in distribution of batteries and that the payment made was towards tribution rights/network in specified locations along with their agreement to abstain for operating their business in those we find the decision of the Hon’ble jurisdictional Madras chnologies Ltd Vs DCIT (41 on similar facts had held the compete fees to be capital in nature. We further note that the Hon’ble jurisdictional Madras High Court in their latest judgment in the HC-2021(MAD)] compete fees paid for acquisition of business rights from two running companies was upheld to In view of the above decisions (supra), we uphold the order of the lower authorities to the extent holding the payment of non-compete fees to be in the nature of capital outlay and therefore allowed as revenue expenditure u/s 37(1) of the Act. 5.12 Having held so above, we now come to the alt the assessee seeking allowance of depreciation on the impugned sum. It is observed that both the lower authorities have admittedly held that the payment of non-compete fees amounted to acquisition of valuable ‘business or commercial righ within the definition of ‘intangible asset’ as set out in Section 2(11)(b) of the Act and therefore in our considered view, the assessee was legally entitled to depreciation thereon u/s 32 of the Act. Accordi reasoning given by the lower authorities to deny the claim of depreciation viz., that the rights acquired upon payment of non marketable or transferable, was of neither any relevance nor decisive to ascertain whether it resulted in creation of ‘intangible assets’ u/s 2(11)(b) of the Act. Further, we find that, the Hon’ble jurisdictional Madras High Court in the cases of Pentasoft Technologies Ltd D India Ltd(supra) have also held that depreciation is to be the non-compete fees as it results in creation of valuable business or commercial rights of enduring nature. Following the same, we direct the AO to allow depreciation on the non This ground is therefore p ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::17 :: to be in the nature of capital outlay and therefore, the same cannot be allowed as revenue expenditure u/s 37(1) of the Act. Having held so above, we now come to the alternate argument of the assessee seeking allowance of depreciation on the impugned sum. It is observed that both the lower authorities have admittedly held that the compete fees amounted to acquisition of valuable ‘business or commercial rights’ and accordingly, we find that, these rights within the definition of ‘intangible asset’ as set out in Section 2(11)(b) of the Act and therefore in our considered view, the assessee was legally entitled to depreciation thereon u/s 32 of the Act. Accordi reasoning given by the lower authorities to deny the claim of depreciation viz., that the rights acquired upon payment of non-compete fee was not marketable or transferable, was of neither any relevance nor decisive to sulted in creation of ‘intangible assets’ u/s 2(11)(b) of the Act. Further, we find that, the Hon’ble jurisdictional Madras High Pentasoft Technologies Ltd (supra) have also held that depreciation is to be compete fees as it results in creation of valuable business or commercial rights of enduring nature. Following the same, we direct the AO to allow depreciation on the non-compete fees u/s 32(1)(ii) of the Act. This ground is therefore partly allowed. 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd the same cannot be ernate argument of the assessee seeking allowance of depreciation on the impugned sum. It is observed that both the lower authorities have admittedly held that the compete fees amounted to acquisition of valuable ts’ and accordingly, we find that, these rights within the definition of ‘intangible asset’ as set out in Section 2(11)(b) of the Act and therefore in our considered view, the assessee was legally entitled to depreciation thereon u/s 32 of the Act. According to us, the reasoning given by the lower authorities to deny the claim of depreciation compete fee was not marketable or transferable, was of neither any relevance nor decisive to sulted in creation of ‘intangible assets’ u/s 2(11)(b) of the Act. Further, we find that, the Hon’ble jurisdictional Madras High (supra)&Areva T & have also held that depreciation is to be allowed on compete fees as it results in creation of valuable business or commercial rights of enduring nature. Following the same, we direct the compete fees u/s 32(1)(ii) of the Act. 6. Ground No. 4 is noted to be against the Ld. CIT(A)’s action upholding the order of the AO disallowing the depreciation of Rs.78,03,958/- claimed on solar power plant. The facts as noted by the AO are that, the assessee had claimed to have Plant with capacity of 1MW at Tada 31.03.2016 and that it was put to use on the same date, which was less than 180 days, and therefore the assessee had claimed depreciation @ 40% on the said fixed asset being Rs.78,03,958/ disallowed the depreciation claim by observing provided receipts for solar power generation with supporting documents from electricity authorities, etc., to prove that the asset was put to use On appeal the Ld. CIT(A) upheld the order of the AO. Aggrieved, the assessee is now in appeal before us. 6.1 Heard both the parties. The Ld. AR has brought to our attention the certificate from the Electricity Department wherein it is observed that the electricity authority has Solar Power Systems was Ld. AR also invited our attention to 31.03.2016 placed at P the assessee had generated 4050 units from 8.00 am to 3.00 31.03.2016 which was supplied to M/s Deccan Hospital, and in support of the same he invited our attention to the ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::18 :: is noted to be against the Ld. CIT(A)’s action upholding the order of the AO disallowing the depreciation of claimed on solar power plant. The facts as noted by the AO are that, the assessee had claimed to have installed a Plant with capacity of 1MW at Tada having value of Rs.1,95,09,645/ 31.03.2016 and that it was put to use on the same date, which was less than 180 days, and therefore the assessee had claimed depreciation @ 40% on the said fixed asset being Rs.78,03,958/-. The AO however disallowed the depreciation claim by observing that the assessee has not provided receipts for solar power generation with supporting documents from electricity authorities, etc., to prove that the asset was put to use On appeal the Ld. CIT(A) upheld the order of the AO. Aggrieved, the in appeal before us. Heard both the parties. The Ld. AR has brought to our attention the certificate from the Electricity Department placed at Page 5 of paper book wherein it is observed that the electricity authority hascertif was installed and synchronized on 31.03.2016. Ld. AR also invited our attention to the energy meter reading as on placed at Page 5 & 6 of the paper book and showed us that, generated 4050 units from 8.00 am to 3.00 which was supplied to M/s Deccan Hospital, and in support of the same he invited our attention to the invoice raised on 31.03.2016 for 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd is noted to be against the Ld. CIT(A)’s action upholding the order of the AO disallowing the depreciation of claimed on solar power plant. The facts as noted by the installed a Solar Power Rs.1,95,09,645/- on 31.03.2016 and that it was put to use on the same date, which was less than 180 days, and therefore the assessee had claimed depreciation @ . The AO however assessee has not provided receipts for solar power generation with supporting documents from electricity authorities, etc., to prove that the asset was put to use. On appeal the Ld. CIT(A) upheld the order of the AO. Aggrieved, the Heard both the parties. The Ld. AR has brought to our attention the placed at Page 5 of paper book certified that the installed and synchronized on 31.03.2016. The the energy meter reading as on and showed us that, generated 4050 units from 8.00 am to 3.00 pm on which was supplied to M/s Deccan Hospital, and in support of invoice raised on 31.03.2016 for supply of 4050 units at the rate of Rs.6 per unit. therefore, the certificate g reading details, invoice raised on customer clearly showed that the solar power plant was put to use on 31.03.2016 and therefore the assessee had rightly claimed depreciation thereon of Rs.78,03,958/ find that these details & evidences were not available before the lower authorities. Hence, in fitness of the matters, we set aside this issue back to the AO for the purpose of verifying these documents now furnished by the assessee and if the sam making the claim for AY 2015 depreciation on the solar power plant say, the AO shall pass a speaking order in this regard after allowing assessee an opportunity for hearing. This ground is therefore allowed for statistical purposes. 7. Overall, therefore, the appeal of the assessee in No.1404/Chny/2023 8. We now take up the appeal in 2016-17. Ground No. 1 does not require any specific adjudication. 9. Ground No. 2 relates to the disallowance of Rs.20,80,422/- claimed u/s 35(2AB) of the Act in relation to the ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::19 :: supply of 4050 units at the rate of Rs.6 per unit. According to the Ld. AR therefore, the certificate given by the electricity department, energy reading details, invoice raised on customer clearly showed that the solar power plant was put to use on 31.03.2016 and therefore the assessee had rightly claimed depreciation thereon of Rs.78,03,958/- find that these details & evidences were not available before the lower authorities. Hence, in fitness of the matters, we set aside this issue back to the AO for the purpose of verifying these documents now furnished by the assessee and if the same is found to be making the claim for AY 2015-16, then AO to consider and depreciation on the solar power plant in accordance to law say, the AO shall pass a speaking order in this regard after allowing tunity for hearing. This ground is therefore allowed for therefore, the appeal of the assessee in is partly allowed. We now take up the appeal in ITA No.1405/Chny/2023 . Ground No. 1 is noted to be general in nature and is therefore does not require any specific adjudication. relates to the disallowance of weighted deduction of claimed u/s 35(2AB) of the Act in relation to the 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd According to the Ld. AR iven by the electricity department, energy reading details, invoice raised on customer clearly showed that the solar power plant was put to use on 31.03.2016 and therefore the assessee -. However, we find that these details & evidences were not available before the lower authorities. Hence, in fitness of the matters, we set aside this issue afresh back to the AO for the purpose of verifying these documents now to be in order for consider and allow the in accordance to law. Needless to say, the AO shall pass a speaking order in this regard after allowing tunity for hearing. This ground is therefore allowed for therefore, the appeal of the assessee in ITA ITA No.1405/Chny/2023 for AY is noted to be general in nature and is therefore weighted deduction of claimed u/s 35(2AB) of the Act in relation to the expenditure incurred at the approved R&D facility for want of Form 3CL from the DSIR. After considering the rival submissions, it is observed that the issue involved in this ground is similar to the Ground No. assessee’s appeal in AY 2015 2015-16, and taking note that DSIRapproval in Form 3C 18.07.2012, before us for the first time, for the interest of justice and fair-play, we set aside this issue back to AO to examine whether the assessee met the two conditions as stated at para 4.2 (supra) and assessee is directed to produce relevant documents to substantiate the same for AY 2016-17 accordance to law after hearing the assessee. This ground is therefore allowed for statistical purposes. 10. Ground No. 3 relates to disallowance of non Rs.4,91,70,411/- paid to JSK & RAL. submissions, it is observed th to the Ground No. 2 of conclusion drawn in A.Y. authorities disallowing the impugned sum holding it to be capital in nat but we allow the alternate claim of the assessee and direct the AO to grant depreciation on the same u/s 32(1)(ii) of the Act. This ground is therefore partly allowed. ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::20 :: expenditure incurred at the approved R&D facility for want of Form 3CL After considering the rival submissions, it is observed that the issue involved in this ground is similar to the Ground No. assessee’s appeal in AY 2015-16.Following our conclusion drawn in A.Y. and taking note that since the assessee produced the DSIRapproval in Form 3CM vide letter F.No.TU/IV-R-D/743/2012 dated , before us for the first time, for the interest of justice and de this issue back to AO to examine whether the assessee met the two conditions as stated at para 4.2 (supra) and assessee is directed to produce relevant documents to substantiate the 17. And the AO to pass order on this issue in ce to law after hearing the assessee. This ground is therefore allowed for statistical purposes. relates to disallowance of non-compete fees of paid to JSK & RAL. After considering the rival submissions, it is observed that the issue involved in this ground is similar of assessee’s appeal in AY 2015-16 conclusion drawn in A.Y. 2015-16, we uphold the order of the lower authorities disallowing the impugned sum holding it to be capital in nat but we allow the alternate claim of the assessee and direct the AO to grant depreciation on the same u/s 32(1)(ii) of the Act. This ground is therefore partly allowed. 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd expenditure incurred at the approved R&D facility for want of Form 3CL After considering the rival submissions, it is observed that the issue involved in this ground is similar to the Ground No. 2 of ng our conclusion drawn in A.Y. ince the assessee produced the D/743/2012 dated , before us for the first time, for the interest of justice and de this issue back to AO to examine whether the assessee met the two conditions as stated at para 4.2 (supra) and assessee is directed to produce relevant documents to substantiate the . And the AO to pass order on this issue in ce to law after hearing the assessee. This ground is therefore compete fees of After considering the rival at the issue involved in this ground is similar 16.Following our uphold the order of the lower authorities disallowing the impugned sum holding it to be capital in nature but we allow the alternate claim of the assessee and direct the AO to grant depreciation on the same u/s 32(1)(ii) of the Act. This ground is 11. Overall, therefore, the appeal of the assessee in No.1405/Chny/2023 12. In the result, both the appeals of the assessee are partly allowed. Order pronounced on the Sd/- (मनोज क ुमार अ\u0019वाल (MANOJ KUMAR AGGARWAL लेखासद\u0007य/ACCOUNTANT MEMBER चे\u0003ई/Chennai, \u0005दनांक/Dated: 19th March, 2025 JPV, Sr.PS आदेशक\r\u000eितिलिपअ\u0014ेिषत/Copy to 1. अपीलाथ\u0014/Appellant 2. \u0015\u0016थ\u0014/Respondent 3. आयकरआयु\u001b/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u0015ितिनिध/DR 5. गाड\u000bफाईल/GF ITA Nos. 1404 & 1405/Chny/2024 (AYs 2015 M/s. Indo National Ltd ::21 :: Overall, therefore, the appeal of the assessee in No.1405/Chny/2023 is partly allowed. In the result, both the appeals of the assessee are partly allowed. Order pronounced on the 19th day of March, 2025, in Chennai. अ\u0019वाल) MANOJ KUMAR AGGARWAL) /ACCOUNTANT MEMBER Sd/ (एबी टी. (ABY T. VARKEY \tयाियकसद\u0007य/JUDICIAL MEMBER , 2025. Copy to: , Chennai / Madurai / Salem / Coimbatore. 1404 & 1405/Chny/2024 s 2015-16 & 2016-17) /s. Indo National Ltd Overall, therefore, the appeal of the assessee in ITA In the result, both the appeals of the assessee are partly allowed. , in Chennai. Sd/- . वक ) VARKEY) /JUDICIAL MEMBER , Chennai / Madurai / Salem / Coimbatore. "