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2017 (10) TMI 689 - HC - Income TaxAddition on account of payment of royalty - seminar expenditure - Assessing Officer had held that the expenditure was a capital expenditure - nature of expenditure - Tribunal allowed it as revenue expenditure - Held that:- No question of law arising. When it is found that the expenditures were for the purpose of augmenting the business of the assessee and did not result into any enduring benefit such expenditures were correctly allowed as revenue expenditures. We are not unmindful of the decision of the Supreme Court in case of Honda Siel Cars (I) Ltd. vs. Commissioner of Income – Tax reported in [2017 (6) TMI 524 - SUPREME COURT OF INDIA] in which on facts it was held that the royalty payment for obtaining technical knowhow for the entire period of agreement was a capital expenditure. The Supreme Court confirmed the view of the High Court that such acquisition resulted into an enduring benefit to the assessee. Disallow the expenditure same was in the nature of penalty - Held that:- CIT(Appeals) and the Tribunal both noted that the amount had to be paid since the assessee failed to achieve the pre-set targets. This was just a contractual liability and not strictly speaking of, penal liability. No question of law therefore arises.
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