9911796707
TMI Blog2015 (9) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... in assessee's own case for earlier assessment years, allowed the ground raised in the appeal filed by the assessee. 4. The Revenue carried the matter in appeal before the Tribunal. 5. At the time of hearing, the ld. Counsel for the assessee has submitted that the issue involved in this appeal is squarely covered by the decision of the Tribunal in assessee's own case for the assessment years 2002-03 to 2007-08. 6. On the other hand, the ld. DR relied on the order of the Assessing Officer and submitted that against the decision of the Tribunal, the Department has preferred appeal before the Hon'ble Jurisdictional High Court. 7. We have heard both sides, perused the materials on record and gone through the orders of authorities below. We find that the ld. CIT(A), by following the decision of the Tribunal in assessee's own case for the assessment years 2002-03 to 2007-08 in I.T.A. Nos. 1791 to 1796/Mds/2011 vide order dated 31.10.2012, decided the issue in favour of the assessee, wherein, the Tribunal has observed as under: "20. We have given our thoughtful consideration to the issue and also perused the relevant findings, contents of paper book referred and case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government of India vide letter No.2/M-7964 dated 3rd May, 2000. Copy of Government approval is annexed to this Agreement. 2. The License and permission granted by TTK in favour of TTK-LIG as aforesaid, shall entitle TTK-LIG, so long as this agreement in force, to use the said monogram on or in relation to the goods of TTK-LIG and in relation to the business activities of TTK-LIG, including the use of the said monogram on stationery, trade literature, packing of goods, labels, wrappers and advertisements of TTL-LIG. TTK-LIG shall not under any circumstances transfer or assign any of their rights under this agreement. 3. TTK-LIG accepts that the said monogram shall be used by TTKLIG under this agreement in a manner indicative of the fact that the copyright in the said monogram is owned by TTK. Illustrative of the words to appear in close proximity to the said monogram, for the purpose of carrying out the requirements of this clause are: 1981 T.T.Krishnamachari & Co When the said monogram is used on or in relation to the goods of TTKLIG A Unit 1981 T.T.Krishnamachari & Co When the said monogram is used otherwise in relation to the name of TTK-LIG 4. The agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee of logo charges @ 2% of the gross sales. The only strife is that per revenue, it is capital expenditure whereas the assessee's plea of treating it as a revenue expenditure stands accepted by CIT(A). We find that in exactly the similar circumstances, the Hon'ble Delhi High Court in the case of G4S Securities System had held as under:- "the ownership rights of the trade mark and know-how throughout vested with the foreign company and on the expiration or termination of the agreement the assessee was to return all the know-how obtained by it under the agreement. The payment of royalty was also to be on year to year basis on the net sales of the assessee and at no point of time was the assessee entitled to become the exclusive owner of the know-how and trade mark. Hence, the expenditure incurred by the assessee as royalty was revenue expenditure and was deductible under section 37(1) of the Income-tax Act, 1961." 20.1. Similarly, the Co-ordinate Bench of Delhi ITAT in the case of DCM Benetton(supra) has also held usage of such brand name etc. to be revenue expenditure by observing as follows:- "From the agreement it is clear that the assessee was only granted non-assig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missed. 9. The next ground of appeal of the Revenue relates to royalty payment. In the assessment order, the Assessing Officer has observed that the payment of royalty for technical know-how is a capital expenditure, which provides the assessee an enduring benefit and for which the Act provides for depreciation and accordingly, he disallowed the claim of the assessee. 10. On appeal, the ld. CIT(A), by following the decision of the Tribunal in assessee's own case for earlier assessment years, allowed the ground raised in the appeal filed by the assessee. 11. After hearing both sides, we find that the ld. CIT(A), by following the decision of the Tribunal in assessee's own case for the assessment years 2002-03 to 2007-08 in I.T.A. Nos. 1791 to 1796/Mds/2011 vide order dated 31.10.2012, decided the issue in favour of the assessee, wherein, the Tribunal has observed as under: "18. We have considered the rival contentions at length and also gone through relevant findings and case laws. There is no quarrel between the parties that the assessee and other entity, namely M/s.LRC Products had entered into an agreement dated 07.03.00 and 01.04.05 followed by supplementary agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OBLIGATIONS HEREIN CONTAINED, THE PARTIES HERETO AGREE AS FOLLOWS: 1. In consideration of the new formulations being made available by LRC, TTK LIG shall pay to LRC a technical knowhow fee, a sum equivalent to 2% (two percent) of the total annual sales turnover of the Company on quarterly rests, subject to deduction of tax at sources as applicable under the provisions of Indian Income Tax Act, 1961 and subject to approval under the Foreign Exchange Regulation Act, 1973 and other applicable Act and Regulations in India. 2. This Agreement shall be in force for a period of five years effective 1st April 2000 and may be renewed thereafter by mutual consent of both the parties. The renewal of this Agreement may be effected by both the parties hereto by exchange of letters signed by persons duly authorised in this behalf. 3. Without prejudice to the provisions of any clause herein, in the event of any breach of this Agreement or default thereunder committed by TTK-LIG, LRC may call upon TTK-LIG to set right such breach or default within a period of 30 days and if TTK-LIG should fail to set right the breach or default within such period, LRC shall be entitled to serve a notice in w ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
