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2021 (9) TMI 1415 - ITAT AHMEDABADNature of expenditure - Trademark License Utilization fees - AO has not agreed with the submission of the assessee and treated the trademark license utilization fees as payment made for acquisition of trademark and licneses within the meaning of capital asset as defined in section 32(1)(ii) and allowed 25% of depreciation - HELD THAT:- As decided in M/s. Vishnu Pouch Packaging Pvt. Ltd . [2019 (12) TMI 1613 - ITAT AHMEDABAD] contractual obligations are ordinary in commercial parlance and does not grant any valuable right to the licensee. The advantage earned by the assessee by use of the license is neither permanent nor ephemeral but is linked to the use of the trademark owned by the licensor. The expense towards use of trademark was clearly laid out for the purpose of ongoing business carried on by the assessee and fee paid for use of such trademark is clearly deductible as revenue expenditure. The assessee herein has been merely granted a license to use trademark on payment of license fee determined on the basis of a formula laid down in the agreement. The right to use can neither be assigned at the wishes of licensee nor is the licensor prohibited to terminate the user license agreement executed with licensee. Thus, licensor retains the inherent control over the manner of use of trademark. Thus license fee paid for mere use of capital asset which continues to belong to someone else thus cannot be regarded to be in the capital field in the hands of licensee. - Decided against revenue.
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