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2014 (10) TMI 695 - ITAT DELHIPartial disallowance on license fee payment u/s 40 A - excessive or unreasonable payment of royalty – Held that:- The assessee paid royalty to the extent of ₹ 100,18,62,000/- on account of general license fee payable to SPN - The AO disallowed to the extent of 40% holding that the assessee has incurred huge expenditure on advertisement which had resulted in brand building for the parent company – following the decision in COMMISSIONER OF INCOME TAX Versus M/s NESTLE INDIA LTD. [2011 (5) TMI 566 - DELHI HIGH COURT] - Past history on the issue has been the reasoning for making the disallowance by the AO and thus apart from difference in the amounts the reasoning for making the disallowance has remained the same - the CIT(A) taking into consideration the past history as discussed in the earlier appeal has deleted the addition made by a disallowance – Decided against revenue. Disallowance u/s 14A – Held that:- The AO considering the facts that the assessee had earned dividend income which did not form part of the total income required the assessee to address why disallowance u/s 14A read with Rule 8D of I.T Rules 1962 should not be made - sub-sections (2) & (3) of section 14A and Rule 8D would operate prospectively does not mean that the AO is not to satisfy himself with the correctness of the claim of the assessee with regard to such expenditure - If he is satisfied that the assessee has correctly reflected the amount of such expenditure, he has to do nothing further – relying upon CIT., Mumbai Versus M/s. Walfort Share & Stock Brokers P. Ltd. [2010 (7) TMI 15 - SUPREME COURT] - in this light of the departmental stand the assessee’s stand that detailed argument on facts are required to be addressed stands addressed by the issue accordingly after having the parties is restore, by the AO who shall adjudicated upon the issue denovo after giving the assessee a reasonable opportunity of being heard – thus, the matter is to be remitted back to the AO for fresh adjudication – Decided in favour of assessee.
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