Document Fragment View
Fragment Information
Showing contexts for: competition in M/S Volvo India Pvt. Ltd.,, vs Acit, Bangalore on 8 May, 2019Matching Fragments
Particulars Amount Remarks
(Rs. in lacs)
TANGIBLE ASSETS (A) Valuation report from H.V. Krishna
Swamy, Chartered Engineer (refer
pages 286-296 of PB - Vol 1 / pages
2730 - 2740 of PB - Vol 4)
Plant and machinery 1059.80
Patterns 27.05
Furnitures and Fixtures 203.74
Vehicles 11.36
Computers 155.90
Total (A) 1,504.24 Claimed depreciation in ITR
Land & Building 7,240.00 Claimed depreciation on Building in
ITR considering actual cost as the
value determined as per the report of
E&Y dated 15.3.2007.
Capital Work in progress 28.86
Total (B) 7,268.86
INTANGIBLE ASSETS Valuation report from M/s Bizworth
(C) India Private Limited (refer pages
324-371 @ 369 of PB - Vol 1 / pages
2741-2788 of PB - Vol 4)
Design & Drawing 3,278.00 Claimed depreciation in ITR
Marketing intangibles 2,223.00 Claimed depreciation in ITR
Order backlog 400.00 Claimed depreciation in ITR
IT(TP)A No.1537/Bang/2012
Spare parts supply rights & 1,387.00 Neither capitalised nor claimed as
benefits revenue. Depreciation claim made
before AO vide letter dated 15.10.2012
(refer Addl. ground 22)
Supplier database 600.00 Claimed depreciation in ITR
Software acquired 194.00 Claimed depreciation in ITR
Sales promotion material 15.00 Neither capitalised nor claimed as
revenue expenditure. Depreciation
claim made before AO vide letter dated
15.10.2012
Non-competition agreement 540.00 Claimed as revenue expenditure.
Alternate claim of depreciation (refer
Addl. ground 16)
Licenses 70.00 Claimed as revenue expenditure.
Alternate claim of depreciation (refer
Addl. ground 19)
Warranties 101.00 Claimed as revenue expenditure.
Alternate claim of depreciation
Total (C) 8,808.00
Total (A +B + C) 17,581.10
Add : Other current assets 1,260.00
(Net)
Total 18,841.10
Add: Goodwill 4,340.90 Depreciation claim made before AO
vide letter dated 15.10.2012 (also refer
Addl. ground 21 of the present appeal)
Total Consideration 23,182.00
36. The following were claimed as revenue expenditure in the revised return of income:-
IT(TP)A No.1537/Bang/2012 Non-competition agreement 540.00 Licenses 70.00 Warranties 101.00 TOTAL 711.00
37. In Gr.No.8 the Assessee has sought deduction of Non-compete fee as revenue expenditure. With prejudice to the aforesaid claim, in (additional) ground No.16 & 19 the payment for non-competition agreement and Licenses is claimed as commercial rights/intangibles on which the Assessee is entitled to claim depreciation as intangible assets viz., commercial rights on which the Assessee is entitled to claim depreciation.
54. The assessing officer disallowed the aforesaid claim as revenue expenditure allegedly holding that (i) non-competition agreement was not entered into / provided by the Assessee (ii) a part of the consideration paid to take over the Ingersoll Rand business was treated as non-competition fee based on the valuation report and (iii) the same being a payment made to take over a business creates a new source of income and is to be regarded as capital expenditure. The DRP concurred with the findings of the assessing officer.
"Section 5.12 Non-Competition; solicitation Restrictions on competing Activities following closing:
Each of the sellers agrees that from the closing until the fifth anniversary of the closing, they will not, and they will ensure that each of the Sellers Affiliates (other than the sold Companies ) will not directly or indirectly engage or invest in any business in competition with the business as conducted immediately prior to the closing. Notwithstanding the foregoing, this section 5.12(a) shall not prohibit (i) the Sellers, directly or through any Affiliate, from conducting any business activities conducted by them as of the date of this agreement(other than the Business), including the business activities of all IR company stores retained by sellers (provided that any business activities conducted by such retained IR company stores shall always be conducted in accordance with the terms of the IRES Sales & Service Agreements ), and the business activities required of the sellers pursuant to the Closing Agreements and pursuant to this Agreement;(ii)Sellers, directly or through any Affiliate, from investing in or holding not more than 10% of the outstanding capital stock or other ownership interests of any person; (iii) the Sellers, directly or through any Affiliate, from hereafter acquiring and continuing to own and operate any entity which has operations that compete with the business if such operations account for no more than 25% of such IT(TP)A No.1537/Bang/2012 acquired entity's consolidated revenues at the time of such acquisition; and (iv) the sellers, directly or through any Affiliate, from selling inventory or other Assets then owned by any seller."