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2019 (9) TMI 186 - AT - Income TaxNature of expenditure - licence fee paid to AE - capital expenditure OR revenue expenditure - HELD THAT:- CIT(A) has brought out clear facts in the light of agreement between the parties that payment of licence fee is for use of brand name of assessee’s AE and such royalty has been paid @1% of total sales effected in India. Payment of licence fee is directly linked to sale made by the assessee and hence there is no error in the finding recorded by the CIT(A) that it is in the nature of revenue expenditure. No doubt, in the case of Assam Bengal Cement Co. Ltd vs CIT [1954 (11) TMI 2 - SUPREME COURT] clearly stated that wherever enduring benefit is derived, the expenditure is to be treated as capital expenditure. But to decide whether a particular expenditure give s enduring benefit to the assessee or not has to be decided in the light of arrangement between parties. In this case, on perusal of agreement between the parties it is clear that the assessee was agreed to pay 1% royalty on total sales which is periodically linked to sales effected by the assessee, but not a lump sum payment for acquiring any right in intellectual property. AO was incorrect in holding that licence fee paid to AE is in the nature of capital expenditure which gives enduring benefit. CIT(A), after considering relevant facts, has rightly deleted addition made by the AO Disallowance of employees contribution to PF & ESIC u/s 36(1)(viia) r.w.s. 2(24)(x) - HELD THAT:- We find that this issue is covered in favour of the assessee by the decision in the case of CIT vs Hindustan Organics Chemical Ltd [2014 (7) TMI 477 - BOMBAY HIGH COURT] where it was held that section 43B is not applicable to payments made beyond the due date specified under respective Acts, if such payments have been made on or before due date of filing return of income. In the case of Alom Extrusions Ltd [2009 (11) TMI 27 - SUPREME COURT] had considered an identical issue and held that contribution payable by the employer to the PF or any other fund for the welfare of the employees was allowable, if such contribution is paid on or before the due date of filing return of income. In this case, CIT(A) has brought out clear facts to the effect that although the assessee has remitted employees contribution to PF / ESIC after the due date specified under respective Act, but such contribution has been paid on or before due date of furnishing return of income.
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