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2017 (2) TMI 792 - AT - Income TaxDisallowance of license fees claimed - Held that:- DR rightly contended that license fee was actually paid by the M/s. Digvijay Chemicals Ltd., however, the fact remains that the liability is/was supposed to be discharged by the assessee company according to MOU. Therefore, on the aforesaid analization, we do not find any hesitation to hold that said liability of 87,50,000/- was the liability of the appellant out of total amount of ₹ 1,27,50,000/- in proportionate from 1966 to 2006. Even otherwise, M/s. Digvijay Chemical Ltd. raised a debt note of ₹ 66,53,000/- and ₹ 20,97,000/-(total ₹ 87,50,000/-) towards renewal and license fee from 1966 to 31st March, 2006 deposited by them. But in fact, this was the liability of the assessee company as per said MOU dated 18.05.2006. Even otherwise the said expenses were accordingly recorded by the appellant in its books of accounts and claimed as deduction on accrual basis for debiting the profit and loss account in the year under consideration. Even otherwise, the liability for business expenditure is admissible in the year, it attends finality as enforceable and under the mercantile system of accounting. The liability is liable in the year of accrual, even it relates to an earlier year and said expenditure of ₹ 87.50 in respect of license fee was the business expenditure which had crystallized , accrued and paid during the financial year under consideration and incurred wholly and exclusively for the business of the assessee.- Decided against revenue
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