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2017 (4) TMI 118 - AT - Income TaxDisallowance of royalty expenses - Held that:- Similar royalty expenditure was deleted by CIT(A) for AY 2008-09 Assessing Officer has verified and found that the assessee was deriving royalty income mainly on technical know-how purchase from M/s Hercules USA vide agreement dated 01/01/2003 whom the royalty is paid 5% of net sale value of the product. The assessee has sold this technical know-how to one party Connell Brothers Company (CBC) with which he entered into agreement and as per this said agreement the assessee would receive a royalty payment of 14% on net sales value of the product against which the assessee has to make payment of 5% to Hercules USA. Thus the difference of 9% on the sales value is effected. The assessee has credited in profit and loss account 14% of the royalty income and net sale value was arrived at. After giving 5% to Hercules and considering the same agreement the CIT(A) was of a view that the addition on account of difference is not required therefore, same was deleted by CIT(A) and the matter went to the Tribunal and the Tribunal has confirmed the same. Therefore, this issue is covered in the favour of the assessee.
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