IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘E’: NEW DELHI)

BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA No:- 1165/Del/2023 (Assessment Year- 2018-19)

M/s Metro Tyres Ltd., Assistant Commissioner of

101, Comm. Complex, Jyoti Vs. Income Tax, Bhawan, Dr. Mukherjee Nagar, Central Circle-5, New Delhi, Delhi-110009. New Delhi.

PAN No: AAACM3394A APPELLANT RESPONDENT Assessee by : Ms. Ananya Kapoor, Adv.

Shri Shivam Yadav, Adv.

Revenue by : Shri Amit Katoch, Sr. DR Date of Hearing : 24.02.2025 Date of Pronouncement : 24.02.2025 ORDER PER SUDHIR PAREEK, JM The aforetitled appeal by the Assessee preferred against the order of Ld. Commissioner of Income Tax (Appeals)-24, New Delhi- 110055, [hereinafter referred to as the Ld. CIT(A)] vide order dated

28.02.2023 pertaining to Assessment Year 2018-19. The Assessee has raised the following ground of appeal:

“1. That, in view of facts and circumstances of the case and in law, the assessment order dated 05.03.2021 passed by the Assessing Officer (‘AO’) under section 143(3) of the Income Tax Act, 1961 (‘the Act) for Assessment Year (‘AY’) 2018-19 and the order of Commissioner of Income Tax (Appeals) [‘CIT(A)’] dated 28.02.2023, and also the addition / disallowance made therein are illegal, bad in law, and without jurisdiction.

2. That in view of facts and circumstances of the case and in law, the AO/CIT(A) has erred in not appreciating that the addition of Rs.

6,92,920/- is illegal and bad in law and the same is liable to be deleted.

3. That in view of the facts and circumstances of the case and in law, the Appellant had substantiated its claim of depreciation on non-compete fee)

and as such the same is allowable in law.

4. That in view of facts and circumstances of the case and in law, the AO/CIT(A) has erred in not appreciating that non-compete fee is an intangible asset as per the provisions of Section 32(1)(ii) of the Act and hence, depreciation is allowable on the same.

5. That, without prejudice, the AO/CIT(A) has erred in not appreciating that the said expense was incurred and non-compete was paid for the purposes of protecting the business of the Appellant and as such is an allowable business expense.

6. That, even otherwise, the AO/CIT(A) has erred in referring to Section

40A(2)(b) of the Act and the same is not attracted in the present case.

7. That, the explanations given, evidence produced and material placed and made available on record have not been properly considered and judicially interpreted and the same do not justify the addition/disallowance.

8. The Appellant craves leave to add to, alter, amend, and/or withdraw any ground or grounds of appeal either before or during the course of hearing the appeal.”

2. Subsequently, the assessee also raised the additional ground of appeal for adjudication as follows:

“5. That without prejudice to other grounds and in the alternative, the non-compete fee paid by the Appellant is allowable expense and the same may kindly be allowed on amortized basis in the year under consideration.”

3. Facts of the case may be concisely summarized as that the assessee filed return of income for the A.Y. 2018-19, declaring Rs. 20,74,65,120/- and income which was processed u/s 143(1) of the I.T. Act and in the meantime, the case was selected for complete scrutiny through CASS. In pursuation thereof, notices u/s 143(2) and 142(1) of the Act were issued on different dates, and in compliance of the abovecited notices, details furnished by the assessee/ appellant company. The Ld. AO found that Rs. 7,02,596/- has been claimed in respect of non-compete fees, out of which Rs. 6,92,920/- claimed on account of depreciation on non- compete fees. For this purpose, the assessee / appellant asked to explain the non-compete fees reflected in the fixed asset’s chart of the company and the depreciation claimed thereof vide notice u/s 142(1) dated 25.02.2021. After completion of said assessment proceedings, the Ld. AO held that non-compe