9911796707
TMI Blog2003 (5) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout appreciating the facts discussed in the assessment order." 2. The Assessing Officer has observed that the assessee has incurred an expenditure of Rs. 2,51,867 towards trade mark compensation which was debited to P L Account. As per Assessing Officer this compensation was stated to be paid to M/s. Ramaika (I) Ltd., for the use of its trade mark "Ramglass" and "Rams" for the sale of fibre-glass decorative sheets. It was submitted M/s. Rammaika (India) Ltd., which is the owner of these trade marks allowed affixing of these trade marks on the fibre-glass sheets sold by the assessee after satisfying itself with the quality inspected by their staff. There was an agreement for payment of compensation @ 5% on the gross sales of fibre-g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mote the sale of products. According to him the facts of the case also revealed that it was not merely a paper transaction. He has also given a finding that there was no diversion of profits to sister concern by way of excessive payment of compensation because the assessee derived profit on payment of compensation, therefore, he has directed to delete the disallowance. 4. Parties appearing before us respectively relied upon the orders of Assessing Officer and CIT(A). Ld. A.R. has also mentioned that the ground raised by the revenue is misconceived because ld. CIT(A) has discussed the facts of the case in detail. Ld. A.R. has also mentioned that the said company has substantial income, therefore, there was no gain to either of the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is hereby confirmed by rejecting this ground of the revenue. Ground No. 2:- "On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the disallowance of Rs. 1,95,000 being 50 per cent of the payment of godown rent without appreciating the correct facts discussed in the assessment order." 6. As per the assessment order the assessee has incurred a sum of Rs. 3,90,000 for godown rent. The Assessing Officer has noted that the appellant had taken the premises at MIDC, Tarapur belonging to M/s. Ram Fabrics (India) Ltd. on lease and licence basis for the use as a transit godown. The godown area taken on lease is 4,500 sq.ft. The Assessing Officer has stated that the monthly rent paid is Rs. 32, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, ultimately made a disallowance of 50 per cent of the godown rent. 7. In first appeal ld. CIT(A) was of the opinion that the rent paid for the premises was quite fair and reasonable. He has also recorded that the deposit made by the assessee was also in accordance with the normal practice. He has also recorded that the turnover during the year was also increased alongwith the increase in profit. According to ld. CIT(A) the provisions of section 40A(2)( b ) not to be applied in each and every payment to a sister concern if the transaction is genuine and not with the intention of evasion of tax. After considering the factual position in detail he has directed to delete the addition. 8. Ld. D.R. has supported the order of Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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