2012 (9) TMI 1057 - AT - Income Tax

Summary

Issues involved:
The issue in this case revolves around the treatment of royalty payments made by the assessee to a company as revenue expenditure, disregarding the requirement of considering it as an acquisition of an intangible asset under Section 32(1)(ii) of the Income-tax Act, 1961.

Summary:

1. Background and Sole Grievance of Revenue:
The Revenue filed appeals against an order of the Commissioner of Income Tax (Appeals) regarding royalty payments made by the assessee. The Revenue's main contention was that the CIT(Appeals) treated the royalty payments as revenue expenditure, contrary to the provisions of Section 32(1)(ii) of the Income-tax Act.

2. Tribunal's Previous Decision:
The Tribunal noted that a similar issue had been previously decided in favor of the assessee in an earlier order. The Tribunal referred to its previous decision where it held that royalty payments were not capital expenditure but rather revenue expenditure, based on the specific circumstances of the case.

3. Consistency in Tribunal's Decisions:
The Tribunal reiterated its stance from previous assessments, where it had ruled in favor of the assessee regarding the treatment of royalty payments as revenue expenditure. The Tribunal found no justification for considering the payments as capital expenditure, affirming the CIT(Appeals)'s decision.

4. Conclusion and Dismissal of Appeals:
Based on the consistent approach taken in previous decisions, the Tribunal upheld the treatment of royalty payments as revenue expenditure and dismissed the appeals of the Revenue. The order was pronounced in Chennai on September 6, 2012.

This summary highlights the key points of the judgment, emphasizing the Tribunal's consistent interpretation of royalty payments as revenue expenditure in line with previous decisions.