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2016 (10) TMI 1389 - AT - Income TaxNature of expenditure - Payment of royalty - Revenue or capital expenditure - HELD THAT:- Whether the payment of royalty by assessee to Carraro SpA, Italy is revenue or capital in nature, has been laid to rest by the Tribunal while deciding the appeal of the Department [2013 (2) TMI 877 - ITAT PUNE] for assessment years 2003-04 and 2004-05 decided the issue in favour of the assessee by holding royalty payment as revenue expenditure. Royalty paid in respect of goods sold in domestic market and the amount of royalty pertains to and is necessarily an expense incurred to earn sales revenue during the year, hence same is revenue expenditure. Amortization of loose tools - principle of consistency - uniformity in treatment and consistency when the facts and circumstances in different years are identical - HELD THAT:- We would like to observe that loose tools refer to patterns/dies further required to manufacture components according to design and technology specifications of the assessee. These components are used in the products manufactured by the assessee. Undisputedly, the dies and designs are provided by the assessee to the suppliers of the components. Merely for the reason that the loose tools are in possession of the suppliers of the components, it does not mean that the loose tools ceases to be the assets of the assessee. The assessee has provided the loose tools to the suppliers of the components for its own convenience. It is not the case of the revenue that the assessee has charged for the dies/patterns (loose tools) from the suppliers. Hon'ble Supreme Court of India in the case of Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT] and Gopal Purohit [2010 (1) TMI 7 - BOMBAY HIGH COURT] has emphasized on the principle of consistency. There should be uniformity in treatment and consistency when the facts and circumstances in different years are identical, particularly in the case of same assessee. Revenue appeal dismissed.
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