2016 (1) TMI 124 - AT - Income Tax

Expenditure incurred by the assessee with regard to payment of logo charges - assessee claimed the same as revenue expenditure but AO treated both the payments as capital in nature and allowed depreciation @ 25% - CIT(A) allowed the claim of the assessee by holding that the payments are in the revenue field - Held that - We have carefully gone through the order of this Tribunal in assessee s own case for assessment years 2002-03 to 2007-08 wherein found that the payment of royalty and logo charges are revenue in nature, therefore, has to be allowed while computing the taxable income. In view of the order of this Tribunal in assessee s own case for assessment years 2002-03 to 2007-08, this Tribunal do not find any reason to interfere with the order of the lower authority. Merely because an appeal against the order of this Tribunal is said to be pending before the High Court, that cannot be a reason to take a different view. - Decided against revenue

Summary

Issues: Delay in filing appeals, Expenditure incurred on logo charges, Payment of royalty

Delay in filing appeals:
The Revenue filed appeals against separate orders of the Commissioner of Income-tax (Appeals)-11, Chennai, for assessment years 2001-02, 2008-09, and 2009-10, with a delay of three days. The Revenue sought condonation of delay, attributing it to the records being mixed up with other files. The Tribunal considered the circumstances and, noting that the appeals were filed promptly upon tracing the records, condoned the delay, admitting the appeals.

Expenditure incurred on logo charges:
The primary issue involved the assessee's claim of &8377; 2,10,34,867/- towards logo charges as revenue expenditure. The Departmental Representative argued that the payment was capital in nature, entitling depreciation at 25%. However, the CIT(A) allowed the claim, following a previous Tribunal order that found such payments exclusively for business purposes. The Tribunal upheld the CIT(A)'s decision, emphasizing that the payments were revenue in nature, consistent with previous rulings, and dismissed the Revenue's appeal.

Payment of royalty:
Another issue concerned the payment of royalty by the assessee, initially treated as fee for technical know-how by the Assessing Officer. The CIT(A), aligning with a Tribunal order from previous years, ruled in favor of the assessee, considering the payment as revenue expenditure. The Tribunal, echoing its previous stance, upheld the CIT(A)'s decision, emphasizing the revenue nature of the payment. Despite a pending appeal before the High Court, the Tribunal confirmed the CIT(A)'s order, leading to the dismissal of all Revenue appeals.

In conclusion, the Tribunal's judgment addressed the delay in filing appeals and analyzed the nature of expenditures on logo charges and royalty, consistently upholding the revenue treatment of these payments based on previous tribunal orders.