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TMI Blog2019 (9) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly stated that wherever enduring benefit is derived, the expenditure is to be treated as capital expenditure. But to decide whether a particular expenditure give s enduring benefit to the assessee or not has to be decided in the light of arrangement between parties. In this case, on perusal of agreement between the parties it is clear that the assessee was agreed to pay 1% royalty on total sales which is periodically linked to sales effected by the assessee, but not a lump sum payment for acquiring any right in intellectual property. AO was incorrect in holding that licence fee paid to AE is in the nature of capital expenditure which gives enduring benefit. CIT(A), after considering relevant facts, has rightly deleted addition made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CIT(A)-24, Mumbai dated 19-03-2018 28-03-2018 and they pertain to AYs 2011-12 2012-13. Since, facts are identical and issues are common, for the sake of convenience, these appeals were heard together and are disposed of by this consolidated order. 2. The brief facts of the case extracted from ITA3894/Mum/2018 for AY 2011-12 are that the assessee company is engaged in manufacturing and trading of woven and non woven products, filed its return of income for AY 2011-12 on 29-11-2011 declaring total income at ₹ 9,37,19,343. The case was selected for scrutiny and during the assessment proceedings, AO noticed that the assessee has debited a sum of ₹ 89,26,627 under the head, licence fees paid; accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aspects to be examined is whether there was a transfer of ownership in the intellectual property rights or in licence. However, where no such rights have been transferred, but an arrangement facility for grant of licence to use those rights for a limited purpose, the same cannot be considered as capital expenditure which gives enduring benefit to the assessee. Accordingly, he deleted addition made by the AO towards disallowance of licence fee paid. Aggrieved by the order of CIT(A), the revenue is in appeal before us. 4. None appeared for the assessee. We have heard the Ld.DR, perused the material available on record and gone through the orders of authorities below. The Ld.DR vehemently argued the issue in light of facts brou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties. In this case, on perusal of agreement between the parties it is clear that the assessee was agreed to pay 1% royalty on total sales which is periodically linked to sales effected by the assessee, but not a lump sum payment for acquiring any right in intellectual property. Therefore, we are of the considered view that the AO was incorrect in holding that licence fee paid to AE is in the nature of capital expenditure which gives enduring benefit. The Ld.CIT(A), after considering relevant facts, has rightly deleted addition made by the AO. Hence, we are inclined to uphold the findings of Ld.CIT(A) and dismiss appeal filed by the revenue. ITA No.3895/Mum/2018 5. The first issue that came up for our cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other fund for the welfare of the employees was allowable, if such contribution is paid on or before the due date of filing return of income. In this case, the Ld.CIT(A) has brought out clear facts to the effect that although the assessee has remitted employees contribution to PF / ESIC after the due date specified under respective Act, but such contribution has been paid on or before due date of furnishing return of income. We do not find any error in the findings of Ld. CIT(A) and hence, reject ground taken by the revenue. 7. In the result, appeal filed by the revenue is dismissed. 8. As a result, both appeals filed by the revenue are dismissed. Order pronounced in the open court on 10-07-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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