Pr. CIT – 2 v. Abbott Healthcare Pvt. Ltd.: Non-compete fees paid under business transfer agreement are allowable as revenue expenditure under Section 37(1).

15. Pr. CIT – 2 vs. Abbott Healthcare Pvt. Ltd.,

[ITA No. 143 OF 2021, dated 18/09/2026, (Bom)(HC)]

[Arising from order dated 6 January 2020 passed by the Tribunal, in I.T.A.No.570/Mum/2018 filed by the Respondent-Assessee, as also the cross-appeal filed by the Department against the Assessee being I.T.A.No.711/Mum/2018. Assessment Year is 2011-2012.]

Section 32: Depreciation – Intangible asset – slump sale agreement – non-compete fees – revenue expenditure.

The primary issue in the Appeal concerned an amount of ₹513,54,60,000 paid by the Assessee to Piramal Healthcare Pvt. Ltd. as non-compete fees under the “slump sale agreement” (business transfer agreement) dated 21 May 2010, under the relevant condition that Piramal Healthcare Pvt. Ltd. would not engage in competing activities for a period of eight years, with effect from 8 September 2010.

The Assessee filed its return of income, claiming depreciation on non-compete fees of ₹128,38,65,000, treating it as an intangible asset eligible for depreciation at the rate of 25%. The Assessing Officer disallowed this claim in the assessment order.

Before the CIT(A), the Assessee contended that its c