2012 (11) TMI 61

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... sum of Rs.64,05,460/- u/s 37(1) of the Act has observed as under:- "On perusal of the P & L A/c., it is noticed that you have debited an amount of Rs.6405460/- under the head recurring royalty/fees. During the course of assessment proceedings, the assessee was required to explain the nature of such expenditure debited and also asked to explain as to why royalty recurring royalty /fees should not be treated as capital expenditure within the spirit of provisions of section 32(l)(ii) of the I.T. Act. The A.R. of the assessee in response, filed copy of written submission on 04/08/2011 in support of treating franchise expenses as revenue expenses u/s, 37(1) of the I.T. Act, which was filed by the assessee company before the Hon'ble ITAT, "C" B .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ed by the department though looking to the smallness of tax effect, appeal to the Hon'ble High Court of Gujarat has not been preferred by the department. Further, it is settled legal principle that if any expenditure is covered under any special/specific provisions of the Act then the allowances or otherwise of such expenses can only be considered under such special/specific provisions. Such special provisions override the general provisions. Reliance in this respect is placed on the decision of the Hon'ble ITAT, Ahmedabad in the case of Dinesh Chandra Chandulal Shah vs. ITO, reported in 40 ITD 483, whereby the Hon'ble Tribunal has held that the claim of bad debt has to be considered under section 36(1) (vii) of the Act and the same cannot .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... f the Act." 4. Ld. CIT(A) allowed the appeal of the assessee by observing as under:- "I have carefully perused the assessment order and the submissions given by the appellant. The issue is covered in favour of the appellant by the orders of Learned ITAT, Ahmedabad in appellant's own case for A.Y. 2005-06 to 2007-08. Similar issue has also been decided by me in the case of the appellant for A.Y. 2008-09 wherein the plea of the appellant has been accepted in view of the judgments of the ITAT, Ahmedabad. Since the facts are identical, respectfully following the judgment of ITAT, Ahmedabad, the addition made by the A.O. is directed to be deleted and the claim of the appellant to treat the expenditure as revenue in nature is allowed. The groun .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X