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TMI Blog2016 (10) TMI 1389X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. These components are used in the products manufactured by the assessee. Undisputedly, the dies and designs are provided by the assessee to the suppliers of the components. Merely for the reason that the loose tools are in possession of the suppliers of the components, it does not mean that the loose tools ceases to be the assets of the assessee. The assessee has provided the loose tools to the suppliers of the components for its own convenience. It is not the case of the revenue that the assessee has charged for the dies/patterns (loose tools) from the suppliers. Hon'ble Supreme Court of India in the case of Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] and Gopal Purohit [ 2010 (1) TMI 7 - BOMBAY HIGH COURT] has emphasized on the principle of consistency. There should be uniformity in treatment and consistency when the facts and circumstances in different years are identical, particularly in the case of same assessee. Revenue appeal dismissed. - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For the Assessee : Shri Rajendra Agiwal For the Revenue : Shri P.L. Kureel ORDER PER VIKAS AWASTHY, JM : The present appeal has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... druff Co. Ltd. Vs. Commissioner of Income-tax (Mad.), 102 ITR 665, is clearly applicable to the assessee's case; and, in the circumstances, it was erroneous to hold the cited decision as distinguishable. 7. The learned Commissioner of Income-tax (Appeals) grossly erred in allowing the assessee's claim of deduction of Rs.68,04,201/- on account of amortization of loose tools instead of confirming the stand taken in the assessment that such amortization was not permissible either u/s. 36 or 37(1) since the loose tools, by the assessee's own admission were capital assets; and, moreover, the claim thus made constituted writing off a capital asset not used in the assessee's business. 8. The learned Commissioner of Income-tax (Appeals) grossly erred in allowing the claim on account of amortization of loose tools merely because the assessee had consistently followed accounting practice of amortization right from the A.Y. 2002-03 and in gross disregard of the fact that not only that such amortization is impermissible in law, rest judicata is also not applicable to Income-tax proceedings. 9. For these and such other grounds as may be urged at the time of the hearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings of Commissioner of Income Tax (Appeals). The ld. AR submitted that the assessee is engaged in the business of manufacturing and trading of Tractor Transmission aggregates and Front Axles. The assessee company is a joint venture of Carraro SpA of Italy and Escorts Ltd. of India. During the period relevant to the assessment year 2008-09 the assessee paid royalty of ₹ 2,28,84,778/- and claimed the same as revenue expenditure. The Assessing Officer rejected the claim of the assessee by holding the payment of royalty as capital expenditure. The issue regarding the nature of royalty payment, Whether revenue or capital was raised in the earlier assessment years, as well. In the assessment year 2007-08 the Tribunal in ITA No. 1278/PN/2012 decided on 29-04-2013 by following the earlier decision of Tribunal in assessee s own case has held that the royalty paid by the assessee is revenue in nature. The ld. AR placed on record a copy of the order of Tribunal in ITA No. 1278/PN/2012. 4.1 In respect of the second issue relating to amortization of loose tools, the ld. AR submitted that the assessee is manufacturing Tractor Axles and Transmission at its own factory at Pune. Besides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Stock Exchange of India Ltd. reported as 14 ITR 583 to support the proposition that even though assets are not located in assessee s business premises, depreciation is allowable. Further, reliance was placed on the CBDT Circular No. 016 (XI-4) dated 31st May, 1961 which deals with the concept of consolidating revenue expenditure and amortizing it over a period of years. The ld. AR further to reinforce his submissions placed reliance on the Taparia Tools Limited Vs. Joint Commissioner of Income Tax reported as 372 ITR 605 (SC). 5. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. We have also considered the decisions on which the ld. AR has placed reliance. In appeal the Department has raised 10 grounds. The ground Nos. 1, 9 and 10 are general in nature and hence, require no adjudication. 6. The ground Nos. 2 to 6 raised in the appeal relate to payment of royalty ₹ 2,28,84,778/-. The assessee has claimed royalty payment as revenue in nature. The Assessing Officer has held the payment of royalty as capital expenditure. We find that the issue, Whether the payment of royalty by assessee to Carra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technical services as provided by the letter under the technical collaboration agreement is allowable as a revenue expenditure. The identical view has been taken in the different decisions. We have also considered the decisions relied on by the Ld. Counsel. More particularly, in the case of Fenner Woodroffe Co. Ltd. vs. CIT (Mad) 102 ITR 665. In the said case there was no limitation regarding exploitation of the knowhow beyond the term of the agreement. Though in the said case the agreement was stated to be in force for the period of 10 years, there was no prohibition for the use of the technical data by the assessee after the period of the 10 years nor there was any clause requiring the said assessee to return the technical data in respect of the benefit under the said agreement. But it is not the case of the assessee. We have also considered the decisions relied on by the Ld. CIT(DR) in the case of CIT vs. Naya Sahitya 84 ITR 567 (Del) and to Visakhapatnam Sugar and Refinery Ltd. vs. CIT 47 ITR 139 (AP) and in our opinion, both the decisions are not helpful to the revenue as the facts are totally different. In our opinion, the Ld. CIT(A) has rightly allowed the expenditure of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004-05 6,75,70,658 84,85,970 7,60,56,628 1,86,61,979 5,73,94,649 2004-05 2005-06 5,73,94,649 46,25,000 6,20,19,649 1,46,50,000 4,73,69,000 2005-06 2006-07 4,73,69,000 85,11,000 5,58,80,000 65.78,000 4,76,65,439 2006-07 2007-08 4,76,65,439 62,53,842 5,39,19,281 83,46,184 4,55,73,097 2007-08 2008-09 4,55,73,097 1,21,22,219 5,76,95,316 68,04,201 5,08,91,115 Since, the assessee has been consistently following this method of accounting and no objection was ever raised by the Department we do not find any merit in the objection raised for the first time in the assessment year 2008-09 on amortization of loose tools. 9. The Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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