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2016 (7) TMI 1658 - ITAT CHENNAIDisallowance u/s 14A r.w.r. 8D - necessity of recording satisfaction - objection of the assessee is that no satisfaction was recorded by the Assessing Officer for the purpose of making disallowance under Rule 8D - HELD THAT:- Either sec. 14A or Rule 8D does not prescribe any form for the purpose of recording satisfaction. The satisfaction has to be inferred from the observation made by the AO in the computation made. When the Assessing Officer found there was a direct expenditure relating to earning of the exempted income and the assessee has not computed the disallowance under Rule 8D, this Tribunal is of the considered opinion that the AO was not satisfied with regard to the claim made by the assessee. Therefore, the Assessing Officer has to recompute the disallowance by applying the procedure prescribed under Rule 8D. Either sec. 14A or Rule 8D does not prescribe any form for the purpose of recording satisfaction. The satisfaction has to be inferred from the observation made by the Assessing Officer in the computation made. When the Assessing Officer found there was a direct expenditure relating to earning of the exempted income and the assessee has not computed the disallowance under Rule 8D, this Tribunal is of the considered opinion that the Assessing Officer was not satisfied with regard to the claim made by the assessee. Therefore, the Assessing Officer has to recompute the disallowance by applying the procedure prescribed under Rule 8D. Nature of expenditure - royalty payment - assessee has paid to Shriram Ownership Trust for using their logo in the assessee’s business - AO treated the payment as capital in nature and allowed depreciation @ 12.5% - According to the ld. DR, the payment made by the assessee was in the nature of capital, therefore, the CIT(A) ought not to have allowed the expenditure as revenue - HELD THAT:- Shriram Ownership Trust is a Trust by itself, therefore, its logo cannot be used by any other concern. The object of the Trust is not to do business. The assessee-company was established for the purpose of business. When the assessee-company used the logo belongs to Shriram Ownership Trust, this Tribunal is of the considered opinion that for the purpose of using the logo, the assessee has to necessarily make the payment. In the case before us, the payment was made on turnover basis, therefore, the same has to be allowed as revenue expenditure u/s 37(1) of the Act. This Tribunal do not find any reason to interfere with the order of the CIT(A) and accordingly, the same is confirmed.
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