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TMI Blog2022 (1) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... ent amount to the plaintiff. This sum was also paid by legal firm which in turn was paid to USA entity who filed the suit against the appellant. Further, a sum of ₹ 1,86,118/- is fees paid for routine maintenance of Patents. Therefore, all these above expenditure have been incurred by the assessee for the protection of its business and intellectual rights. These expenditure has been incurred mostly on account of defending the right of the assessee, therefore the same cannot held to be an expenditure which resulted into any endure benefit to the assessee. Any expenditure incurred by the assessee company for protection of IPR rights and for normal maintenance of its intellectual property are revenue expenditure. Further, the increase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment proceedings, the learned Assessing Officer noted that the assessee has claimed a sum of ₹ 6,65,43,002/- under the head Exceptional items which included as legal and professional charges amounting to ₹ 8,73,34,686/-. Some other credits were also exceptional items and therefore, there was a net debit of ₹ 6,65,43,002/-. The learned Assessing Officer noted that in view of quantum of expenditure and note 16 of schedule 18 of the annual accounts, the claim needs to be examined. Assessee submitted that the legal fees of ₹ 8,73,34,686/- was paid on account of normal routine maintenance of patents, settlement amount paid and legal fees paid to defend existing rights of assessee. Assessee submitted that the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttlement amount paid to legal firm who further paid to the another US entity, who filed suit against the company. He held that the deduction for expenditure incurred on litigation as well as the settlement amount paid by the assessee is a Revenue expenditure. He further referred to the several judicial precedents on that issue. Accordingly, he deleted the entire disallowance made by the Assessing Officer. Therefore, the Assessing Officer is aggrieved by that order and has preferred this appeal. 05. The learned Departmental Representative supported the orders of the learned Assessing Officer held that the expenditure of ₹ 8,73,34,686/- incurred by the assessee is correctly held to be an capital expenditure. 06. The learned author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77;6,39,50,543/-. Ultimately, the patent suit resulted into a settlement agreement and the assessee paid settlement amount of ₹ 1,32,98,025/- to the plaintiff. This sum was also paid by legal firm which in turn was paid to USA entity who filed the suit against the appellant. Further, a sum of ₹ 1,86,118/- is fees paid for routine maintenance of Patents. Therefore, all these above expenditure have been incurred by the assessee for the protection of its business and intellectual rights. These expenditure has been incurred mostly on account of defending the right of the assessee, therefore the same cannot held to be an expenditure which resulted into any endure benefit to the assessee. Any expenditure incurred by the assessee compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e capital expenditure. For this year the Assessing Officer disallowed a sum of ₹3,34,14,989/-. The learned CIT(A) deleted the disallowance. Both the parties confirmed that there is no change in the facts and circumstances of the case and CIT(A) has also followed his own order for Assessment Year 2010-11. 012. We have carefully considered the rival contentions and also perused the orders of the lower authorities. For the reasons given by us while confirming the order of learned CIT(A) for Assessment Year 2010-11, for similar reasons we also confirm order of learned CIT(A) deleting the disallowance of ₹3,34,14,989/- on account of legal fees and settlement amount for this Assessment year . Thus, order of the learned CIT(A) is co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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