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2023 (9) TMI 983 - HC - Income TaxNature of expenses - payment of royalty - whether towards acquisition of intangible asset and is revenue expenditure? - HELD THAT:- Issue is decided in favour of the assessee, by a common judgment [2022 (6) TMI 1428 - MADRAS HIGH COURT] the benefit granted by the licensor is not enduring in nature in the present cases. The assessing officer without appreciating the terms of the licence agreement and ascertaining the nature of the expenditure incurred by the assessee companies, disallowed the deduction of royalty payment and allowed the depreciation at 25% treating it as capital expenditure. However, the appellate authorities, while deleting the disallowances made by the assessing officer, have rightly treated the royalty payment as revenue expenditure. Once the payment of royalty is treated as revenue expenditure, automatically, it goes without saying that the assessees would be entitled to 100% deduction. Therefore, we need not interfere with the orders passed by appellate authorities. Accordingly, the substantial questions of law relating to royalty, are answered in favour of the assessee. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As the Hon'ble Supreme Court in the decision in Maxopp Investment Ltd. [2018 (3) TMI 805 - SUPREME COURT] decided the same in favour of the assessee, by holding that Rule 8D is prospective in nature and could not have been made applicable in respect of assessment years prior to 2007, when this rule was inserted.
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