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TMI Blog2021 (9) TMI 1415X X X X Extracts X X X X X X X X Extracts X X X X ..... nt nor ephemeral but is linked to the use of the trademark owned by the licensor. The expense towards use of trademark was clearly laid out for the purpose of ongoing business carried on by the assessee and fee paid for use of such trademark is clearly deductible as revenue expenditure. The assessee herein has been merely granted a license to use trademark on payment of license fee determined on the basis of a formula laid down in the agreement. The right to use can neither be assigned at the wishes of licensee nor is the licensor prohibited to terminate the user license agreement executed with licensee. Thus, licensor retains the inherent control over the manner of use of trademark. Thus license fee paid for mere use of capital asset which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business of manufacturing and marketing under the trade mark and entered into agreement with same license in the form of special license agreement. Copy of the agreement entered into by Shri Mukesh Garg with Vishnu and Company Trade Mark Pvt. Ltd. and subsequently agreement of Shri Mukesh Garg and the assessee has been submitted to the Assessing Officer. On perusal of the agreement, the Assessing Officer was of the view that the nature of expenditure claimed was of capital in nature. On query, the assessee has submitted various details in respect of trade mark license utilization fees which is incorporated at page no. 2 3 of the assessment order. The fees is paid as a percentage of sales during the year under agreement with the licensee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in A.Y.2010-11 2011-12 have been dismissed by Hon'ble ITAT in ITA No. 2046/Ahd/2Q13 1218/Ahd/2015 order dated 06.04.2017. Undersigned in the appeal No. CIT(A)- 8/02, 263 10968/15-16 and 16-17 pertaining to A.Y. 2012-13, 201314 2014-15 have allowed the appeal of the appellant on this issue vide order dated 21.03.2018. Facts of the case continue to be same Hence, respectfully following the order of Hon'ble ITAT in the appellant's case and for the reasons as per the orders of my predecessor and my order referred hereinabove the disallowance made by AG towards payment of license fee amounting to Rs.10,64,08,971- is deleted. The sum of Rs.14,18,78,627/- charged by the appellant to revenue towards trade mark license utilizat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee for indefinite period and the expenditure incurred is bringing enduring advantage to the assessee and therefore incurred in the capital field and consequently liable to be disallowed. We find that issue has been earlier examined by the co-ordinate bench in the hands of the erstwhile partnership firm (now converted into Private Limited Company i.e. assessee). The relevant operative para of the order of the Tribunal is reproduced hereunder: 8. The second grievance of the revenue relates to the deletion of the addition of Rs. 5,32,83,949/- made on account of payment paid to Vishnu Company Trade Mark Pvt. Ltd. for use of trade mark which was treated as capital expenditure by the A.O. 9. While scrutinizing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son to treat the impugned payment as capital expenditure. The ld. CIT(A) accordingly directed the A.O. to delete the impugned addition. 12. Before us, the ld. D.R. strongly relied upon the findings of the A.O. 13. We have carefully gone through the orders of the authorities below and the relevant documentary evidences brought on record in the form of a paper book. There is no dispute that the Vimal Trade Mark is owned by Vishnu Company Trade Mark Pvt. Ltd. It is also true that the assessee has paid the royalty as per the terms and conditions of the registered agreement. It is equally true that the CBDT circular No. 10/69/61-IT(AI) dated 04.09.1962 is not applicable in the instant case. We further find that in the immediately ..... X X X X Extracts X X X X X X X X Extracts X X X X
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