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2014 (3) TMI 254 - AT - Income TaxDisallowance of tax on Brand Usage Royalty Held that:- The decision in Johnson & Johnson Ltd. Versus Assistant Commissioner of Income-tax [2014 (2) TMI 978 - ITAT MUMBAI] followed - The CIT(A) erred in ignoring the copy of draft brand usage royalty agreement which was submitted by the assessee alongwith application to RBI - If the assessee which carries on a business find that it is commercially expedient to incur certain expenditure directly or indirectly, it would be open to such an assessee to do so notwithstanding the fact that a formal deed does not precede the incurring of such expenditure - there is no merit in the enhancement made by the CIT(A) thus, the AO is directed to delete the addition made by the CIT(A) Decided in favour of Assessee. Disallowance of service tax Held that:- The decision in Johnson & Johnson Limited Versus Commissioner of Income Tax-LTU [2014 (2) TMI 555 - ITAT MUMBAI] followed - the taxes were liability of the assessee- company under the terms of agreements and accordingly disallowance made by AO were deleted - liability of payment of service tax is of recipient of services and since assessee is the receiver of services, it is the liability of the assessee company to bear service tax Decided in favour of Assessee. Disallowance of technical know-how royalty payment on traded goods Restriction of technical know-how royalty to 1% in respect of manufactured goods - Held that:- The decision in Johnson & Johnson Limited Versus Commissioner of Income Tax-LTU [2014 (2) TMI 555 - ITAT MUMBAI] followed - Royalty payments has been approved by RBI and therefore deserves to be allowed - as the payments have been made in the light of the agreement with J&J US and as per the approval/guidelines of the RBI, there is no reason to disallow the tax and R&D Cess paid on technical royalty - the AO is directed to delete the addition made Decided in favour of Assessee. Disallowance of tax and R&D Cess paid on technical know-how royalty Held that:- The decision in Johnson & Johnson Ltd. Versus Assistant Commissioner of Income-tax [2014 (2) TMI 978 - ITAT MUMBAI] followed - Royalty payments has been approved by RBI and therefore deserves to be allowed - as the payments have been made in the light of the agreement with J&J US and as per the approval/guidelines of the RBI, there is no reason to disallow the tax and R&D Cess paid on technical royalty - the AO is directed to delete the addition made Decided in favour of Assessee. Disallowance of service tax paid on know-how royalty Held that:- The decision in Johnson & Johnson Limited Versus Commissioner of Income Tax-LTU [2014 (2) TMI 555 - ITAT MUMBAI] followed - the disallowance made by TPO on account of cess service tax is not justified Decided in favour of Assessee. Advertising, marketing and promotion (AMP) expenditure Held that:- The assessee reiterated that AMP expenditure is not an international transaction - The additional supporting documents need to be verified by the TPO the matter remitted back to the TPO - The TPO is directed to decide this issue denovo after considering the documents filed by the assessee and after giving reasonable opportunity of being heard to the assessee Decided in favour of Assessee. Disallowance of expenditure incurred on production of advertisement films Held that:- The decision in Johnson & Johnson Limited Versus Commissioner of Income Tax-LTU [2014 (2) TMI 555 - ITAT MUMBAI] followed - the expenditure on production of advertisement films is revenue in nature - the expenditure on production of advertisement films is revenue in nature and accordingly direct the AO to delete the same Decided in favour of Assessee. Adjustments made u/s. 145A of the Act Held that:- The decision in Johnson & Johnson Limited Versus Commissioner of Income Tax-LTU [2014 (2) TMI 555 - ITAT MUMBAI] followed the matter remitted back to the AO for fresh adjudication Decided in favour of Assessee. Reserve for cash discount of the previous year written back during the current year Held that:- The decision in ADDL COMMISSIONER OF INCOME TAX Versus M/s JOHNSON & JOHNSON LTD [2013 (6) TMI 286 - ITAT MUMBAI] followed - reserves which were not allowed in the earlier assessment year was written back during the current year thus, the matter remitted back to the AO to decide the alternative grievance of the assessee Decided in favour of Assessee. Disallowance of 1% of travelling expenditure Held that:- The decision in Johnson & Johnson Limited Versus Commissioner of Income Tax-LTU [2014 (2) TMI 555 - ITAT MUMBAI] followed the adhoc disallowance deleted on travelling expenses Decided in favour of Assessee. Disallowance of depreciation claimed on testing equipments Held that:- The decision in Johnson & Johnson Limited Versus Commissioner of Income Tax-LTU [2014 (2) TMI 555 - ITAT MUMBAI] followed - the claim of depreciation on the testing equipments allowed thus, the AO is directed to allow the claim of depreciation on testing equipments Decided in favour of Assessee. Short grant of credit for TDS Held that:- The issue needs verification at the assessment stage thus, the AO is directed to verify the TDS certificates and then allow the correct claim as per the provisions of the law Decided in favour of Assessee.
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