9911796707
TMI Blog2015 (9) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... clines to frame a question of law as regards the said issue. - Decided against revenue. Addition of expenditure incurred towards payment of royalty to Metso Minerals (Australia) - AO held this to be of enduring benefit and treated it as capital expenditure nature while allowing depreciation @25% thereon denied by ITAT - Held that:- ITAT analyzed that there is no assignment of the intellectual property rights in terms of the agreements in favour of the Assessee. The licenses were granted on non-exclusive basis and for a limited period. The Assessee was not authorized to use or permit others to use such technology except as specifically permitted by the licensor. In these circumstances, the decision of the ITAT that the said expenditure co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng engineering services. During the year in question, the Assessee provided and also received engineering services to/from the MM Mumbai and for which the Assessee paid ₹ 48.31 lakhs to MM Mumbai and received a sum of ₹ 9.01 crores from MM Mumbai. 3. The Assessing Officer ('AO') held that the payment made to the MM Mumbai @ ₹ 500 per hour was excessive and unreasonable in terms of Section 40A(2)(b) of the Act, since the Assessee failed to furnish any comparable case showing that the rate so charged was in conformity with the prevailing market rate. It was observed that MM Mumbai had been incurring losses for the last few years. Accordingly, the AO disallowed 50% of the sum of ₹ 48.31 lakhs under Section 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the Court declines to frame a question of law as regards the said issue. 6. The second issue raised by the Revenue concerns the addition of expenditure of ₹ 2,26,97,568 incurred by the Assessee towards payment of royalty to Metso Minerals (Australia). The AO held this to be of enduring benefit and treated it as capital expenditure nature while allowing depreciation @25% thereon. 7. The ITAT analyzed the engineering and technology license agreement as well as the royalty agreement entered into by the Assessee with its associated enterprises and noticed that there is no assignment of the intellectual property rights in terms of the agreements in favour of the Assessee. The licenses were granted on non-exclusive basis and for a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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