2017 (4) TMI 526 - HC - Income Tax

Disallowance of Royalty expenses under Section 35AB - Held that - From the impugned judgment and order passed by the learned ITAT, it appears that the learned Tribunal has deleted the disallowance of Royalty expenses of ₹ 1,12,12,352/- under Section 35AB of the Act made by the Assessing Officer, relying upon and considering its earlier order in the case of very assessee, but for earlier assessment year. It is reported that against the decision of learned Tribunal on the very issue and in the case of very assessee, but with respect to earlier assessment year, an appeal was preferred by the Revenue before this Court and the Division Bench had not admitted the appeal qua the aforesaid issue. Meaning thereby, the order passed by the learned Tribunal in the case of very assessee on the very issue, but with respect to earlier assessment year, has been accepted by the Division Bench of this Court and/or the same has not been upset by the Division Bench of this Court. Thus it cannot be said that the learned Tribunal has committed any error of law.

Summary

Issues:
Challenge to deletion of disallowance of Royalty expenses under Section 35AB of the Act by the Income Tax Appellate Tribunal.

Analysis:
The High Court dealt with a Tax Appeal challenging the impugned Order passed by the Income Tax Appellate Tribunal regarding the disallowance of Royalty expenses under Section 35AB of the Act. The Revenue contended that the Tribunal erred in law by deleting the disallowance. The Court noted that the Tribunal had based its decision on a previous order in the case of the same assessee for an earlier assessment year. The Court highlighted that a similar issue had been appealed before the Division Bench previously, which did not admit the appeal, indicating acceptance of the Tribunal's decision. Consequently, the Court concluded that the Tribunal did not commit any legal error in its decision. As a result, the Court found no question of law arising in the present Tax Appeal and dismissed the appeal accordingly.

This judgment underscores the importance of consistency in legal decisions and the significance of precedent in tax matters. It demonstrates how previous decisions can impact current cases and highlights the role of higher courts in upholding or overturning lower court decisions. The judgment also emphasizes the need for thorough legal reasoning and analysis in tax appeals to ensure the correct application of the law.