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2014 (2) TMI 178 - HC - Income TaxDeductibility of Licence fee - Whether the Tribunal was right in holding that the licence fee paid to M/s. RPG Enterprises Ltd. can be deducted as business expenditure – Held that:- Assessee by availing of service benefits from the group resource company availed of valuable benefit, for their business operations and that the payment of licence fee to M/s. RPG Enterprise Ltd. by the respondent-assessee was towards their share of actual expenses incurred by M/s. RPG Enterprises Ltd. - the expenditure incurred by the respondent-assessee towards the licence fee payment to M/s. RPG Enterprises Ltd. were relatable to the business expediency and profits of the respondent-assessee and that the benefits availed of by the assessee from the service of the group resource company was tangible and justified - The decision in CIT v. Shambhu Investment Pvt. Ltd. [2001 (3) TMI 77 - CALCUTTA High Court] followed - It is settled law in so far as the scope, power and ambit of the High Court in exercise of jurisdiction under section 260A of the Income-tax Act - a transaction or an arrangement which is perfectly permissible and which may have the effect of reduction of tax burden need not be seen with tainted disfavor – Decided against Revenue. Nature of Expenses - Whether the expenditure is to be allowed as a deduction from business income as it is incurred in connection with lease of property, income from which is assessed under the head 'Income from house property and the legal expenses incurred in connection with obtaining a security deposit from a client can be treated as business expenditure merely because such deposit amount was utilised for business purposes – Held that:- There was a direct and proximate nexus between the legal expenses incurred and the business carried on by the assessee – The decision Orient Beverages Ltd. v. Asst. CIT [1993 (9) TMI 151 - ITAT CALCUTTA-E ] followed - the legal charges and other expenses incurred by the assessees for their property division was allowable as a deduction in computing the profits and gains of business as the expenses resulted in substantial savings in business expenses of the assessee. The assessee has derived income under various heads of income and one of the income was on account of development of property - The expenses incurred to obtain deposits from the tenants by initiation of legal action was only in furtherance of the said business objective and, therefore, the expenditure would also be relatable to the same - The Revenue has not placed any material on record to persuade to come to a different conclusion - there is no infirmity or illegality in the orders and there exists no substantial question much less any question of law on the issue – Decided against Revenue.
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