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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 ..... ssment years 02. Only issue in this appeal is with respect to the disallowance of expenditure incurred by the assessee towards legal fees. 03. We first set out the facts for Assessment Year 2011-12 which shows that assessee is a company engaged in the business of manufacturing and trading of Nutraceuticals products and filed its returned of income on 15.10.2011 declaring total income of Rs. 3,48,97,413/-. During the course of assessment proceedings, the learned Assessing Officer noted that the assessee has claimed a sum of Rs. 6,65,43,002/- under the head Exceptional items which included as legal and professional charges amounting to Rs. 8,73,34,686/-. Some other credits were also exceptional items and therefore, there was a net debit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He held that a sum of Rs.3,11,89,390/- is a legal and professional fees incurred and debited in the books of account of the assessee for Assessment Year 2009-10 and therefore, it is not pertaining to this year. With respect to the balance sum of Rs.8,73,34,686/- he held that a sum of Rs.6,39,50,543/- was legal fees paid to legal firm and further a sum of Rs.1,32,98,025/- is settlement 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 disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of its process in United States. A US based company filed suit against the appellant in July, 2008 for infringement of the patents rights. The assessee was also made a parity to the suit. It impacted adversely sale of assessee's product. Therefore, to defend the suit the assessee engaged a law firm in US. The total fees paid on that account is to the tune of Rs.6,39,50,543/-. Ultimately, the patent suit resulted into a settlement agreement and the assessee paid settlement amount of Rs. 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 Rs. 1,86,118/- is fees paid for routine maintenance of Patents. Therefore, all these above ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.28/Mum/2020 filed by the learned Assessing Officer for Assessment Year 2010-11 is dismissed. ITA Nos. 29/Mum/2020 AY 2011-12 011. The appeal filed for Assessment Year 2011-12 is also on the similar grounds whether similar nature of expenditure have been disallowed by the learned Assessing Officer holding the same to be capital expenditure. For this year the Assessing Officer disallowed a sum of Rs.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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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