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2013 (1) TMI 488 - HC - Income TaxDisallowance of non-compete fees - CIT(A) deleted the addition and confirmed by ITAT - Held that:- At paragraph 12 of the impugned order the Tribunal while dealing with marketing knowhow expenses has also observed that non-compete fee was also dictated by business and commercial expediency and was not an expenses incurred for acquisition of capital assets but only enhanced its profitability. However, there is no discussion on the issue before coming to the above conclusion. Therefore, the issue with this regard has to be remanded to the Tribunal to enable it to pass an order with reasons while determining whether non-compete fees was revenue or capital expenditure - in favour of revenue for statistical purposes. Disallowance of marketing know how - CIT(A) deleted the addition and confirmed by ITAT - Held that:- On an examination of marketing knowhow agreement it is very clear that this agreement would lead to an improvement in its existing business resulting in higher sales and consequently higher profitability. This is so as the amounts spent on marketing knowhow would result in improving the profits of the business on the acquired brands as this knowledge would assist in improving the marketing strategy. The expenses incurred for acquiring this marketing knowhow if incurred by the respondent would be revenue and merely because it is outsourced it does not cease to be revenue expenditure. The expenditure incurred on marketing knowhow, according to the Tribunal would result in higher sales as well as lead to higher profit. Consequently,will be revenue expenditure as correctly held by the Tribunal - against revenue. Disallowance of depreciation on Royalty payments - CIT(A) deleted the addition and confirmed by ITAT - Held that:- Tribunal has reached a finding of fact that the royalty payment was a part of the cost of the acquisition of the brand and therefore, would form a part of the cost of the assets namely the brand, thus entitled to depreciation u/s 32 - no fault can be found with the order of the Tribunal - against the revenue. Interest charged u/s 234B and 234C while computing income u/s 115JB - Held that:- Decided in favour of revenue relying on case of Rolta India Ltd v. CIT [2011 (1) TMI 5 - SUPREME COURT OF INDIA] wherein held that interest under Sections 234B and 234C shall be payable on failure to pay advance tax in respect of tax payable under Section 115JA/115JB - against assessee.
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