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2011 (10) TMI 18 - AT - Income TaxAllowability of Royalty Expense. - Disallowance in consultancy Charges u/s 40A(2) on the basis of reasonability of payment. - Disallowance of advertisement and sale promotion expenses on the grounds that advertisement expenditure in print media is in respect of brand promotion. advertisement expenditure pertains not only to assessee but also confer benefits to other associate concerns therefore assessee is entitled to deduction of proportionate expenditure only. Regarding of Roylaty Expense. - Held that:- it is an open ended agreement, it is only for the use of know-how and patents including improvements to the know-how. No proprietary right has been passed on to the assessee in the know-how or the patent. decided in favour of Assessee. Regarding disallowance u/s 40A(2). - Held that:-it is upon the assessee to decide what expenses are to be incurred or what is required for business purposes and it is not open to the Revenue to prescribe as to what expenses are to be incurred by the assessee. - Decided in favour of Assesseee. Regarding disallowance of Advertisement and sale promotion. - Held that:- the assessee was the brand owner, it has vested interests and incurring of expenditure for promotion of brand was in the interest of the business of the assessee company only. We also found that similar expenditure was allowed consistently in the past and no disallowance has been made towards these expenses. - Decided in favour of Assessee.
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