2020 (1) TMI 926 - HC - Income Tax

Addition of Sub License Fee Expenses - allowable revenue expenditure - Tribunal upholding the order of the CIT(A) for deleting addition - HELD THAT - Tribunal has relied upon the decision of the Delhi High Court in the case of CIT vs. J K Synthetic Ltd 2008 (12) TMI 21 - DELHI HIGH COURT wherein the Delhi High Court has taken the view that no under the agreement the assessee has obtained a technical assistance and acquired some technical information which was a knowhow related to process of manufacture, then it is not a transfer of the ownership of the knowhow and to be treated as revenue expenditure. We are in complete agreement with the finding recorded by the Tribunal as regards the proposed question No.2 C is concerned.

Summary

Issues:
- Disallowance on account of discount and rate difference
- Disallowance made under section 40(A)(2)
- Addition of Sub License Fee Expenses

Disallowance on account of discount and rate difference:
The High Court addressed the issue of disallowance on account of discount and rate difference. The Revenue raised questions regarding the Tribunal's decision to delete disallowances amounting to specific sums. The Court examined the facts and circumstances of the case along with relevant legal provisions. Ultimately, the Court dismissed the Tax Appeal concerning the questions related to this issue.

Disallowance made under section 40(A)(2):
The Court considered the disallowance made under section 40(A)(2) by the Revenue. The questions raised by the Revenue pertained to the Tribunal's decision to delete a specific disallowance amount. After reviewing the case details and legal aspects, the Court dismissed the Tax Appeal concerning the questions related to this issue.

Addition of Sub License Fee Expenses:
The Court analyzed the addition of Sub License Fee Expenses in detail. The Tribunal concurred with the CIT(A) in deleting the addition of expenses related to sublicense fees. The Court noted that the appellant acquired a sublicense for using technology without creating any asset. The Tribunal referenced judgments from the Delhi High Court and a Coordinate Bench to support the decision. The Court agreed with the Tribunal's findings and confirmed the deletion of the addition of Sub License Fee Expenses. Consequently, the Court dismissed the appeal related to this issue.

In conclusion, the High Court thoroughly examined and addressed the issues of disallowances on account of discount and rate difference, disallowance under section 40(A)(2), and addition of Sub License Fee Expenses. The Court considered the facts, legal provisions, and precedents to make informed decisions, ultimately dismissing the Tax Appeal concerning each specific issue raised by the Revenue.