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2018 (3) TMI 133 - AT - Income TaxDisallowance of license fee/royalty paid by the appellant in pursuant to agreement for use of Brand Name “ARA LAW” - Held that:- In the absence of any material to repudiate the ‘Name Licence’ agreement dated 18.03.2004 or challenge its bona fide, the disallowance is unsustainable. Secondly, the fact that the Annual Accounts have been drawn and in the Profit & Loss Account, the payment of royalty to the founder partner has been claimed as a deduction and such accounts have been adopted by the partners is a factum which demonstrates the consent of the partners to incur such expenditure, which is in consonance with the agreement dated 18.03.2004 between the assessee-firm and the founder partner. Therefore, under these circumstances, we are unable to uphold the disallowance sustained by CIT(A), which is hereby directed to be deleted.- Decided in favour of assessee Ad hoc disallowance of 5% sustained by the CIT(A) out of various expenses, viz., business promotion expenditure, travelling expenditure and telephone expenditure - Held that:- We note that in the assessment order as well as in the order of CIT(A), the disallowance has been made on mere surmises without establishing that any particular expenditure has been incurred for non-business purposes. Therefore, the ad hoc disallowance made is hereby directed to be deleted. - Decided in favour of assessee
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