TMI Blog2013 (5) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... made. Thus even on the ground of consistency, we agree with the Ld.CIT(A). Hence we uphold the order of the CIT(A) - Decided against the revenue. - ITA no. 2933/Del/2012 - - - Dated:- 13-2-2013 - J. Sudhakar Reddy, AM And Rajpal Yadav, JM,JJ. For the Appellant : Sh. Sukhveer Choudhary, Sr.D.R. For the Respondent : Sri C. S. Aggarwal, Sr. Adv and Sri R. P. Mal, Adv. ORDER Per J. Sudhakar Reddy, AM This is an appeal filed by the Revenue directed against the order of the Ld.CIT(A)-XII, New Delhi dt. 16.04.2012 pertaining to the Assessment Year 2007-08 on the following grounds. "1. The Ld.CIT(A) has erred on the facts and circumstances of the case and in law in deleting the addition of Rs.80,87,520/- on account of royalty on unaccounted receipts. 2. The Ld.CIT(A) has erred on the facts and circumstances of the case and in law in holding that royalty payment had no linkage with the spreading over of income received from fees on enrolment of the students though as per the agreement, 20% of the gross course fees was required to be paid as royalty. 3. The appellant craves leave to add, alter or amend any ground of appeal raised above, at the time of hearing." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Consumer Financial Services and upheld the claim of the assessee. 8. Aggrieved the Revenue is in appeal before us. 9. Article V of the License agreement reads as follows. 'ARTICLE 5: CONSIDERATION' 1. Royalty a) The LICENSEE agrees to pay to the LICENSOR 20% of the gross course fee as royalty. The enrolment of student shall be sufficient consideration for royalty i.e. as soon as the student is enrolled the royalty shall fall due irrespective of the realization of fees. b) The royalty shall be charged on the gross course fee i.e. without deducting the scholarship and/or fee concessions, from the course fee. c) The LICENSEE shall send a statement of course fees for the relevant month and for the total period from the first day of the FY to the last day of such a month in format prescribed by the LICENSOR. d) No royalty shall be charged on the Aptitude Test Fee, however all the expenses incurred by the LICENSOR in this respect, shall be reimbursed ;by the LICENSEE." Article 5(1)(a) clearly stipulates that enrollment of student shall be sufficient condition for royalty to fall due. It further states that it becomes due as soon as the student is enrolled irrespectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the amount spent on the direct selling agents commission and stamping fee should also be spread accordingly. As such we accept the Ld.Counsel of the assessee's contention that there is no issue before us to whether there is a nexus between amount paid as commission and the disbursement of loan in the concerned year. Hence, the reliance of the DR on the above said Tribunal decision is not applicable. 30.1. Now in this case, we find that the expenditure has actually been incurred ;by the assessee in the impugned financial years. The commission become due and payable to the agents as soon as the business is procured by them. Under no circumstances, the amount is liable to be returned to the assessee. It is also evident from the documents regarding Assessing Officer's enquiry and assessee's response that Assessing Officer has duly examined the aspect and found that in the current period the amount paid as commission is not at all linked with the loan disbursement during the year. It is also evident that amount paid as commission in a particular year can in not way be claimed as refund by the assessee under any circumstances, even if the amount financed is forfeited. We also find fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such financing were ranging from less than one year to upto 5 years. On such transactions, direct selling expenses, stamping fee and commission paid to the selling agents could not be treated as expense relating to the year in which the transaction took place as the period of financing was normally more than one year. On this premise, the Assessing Officer took the view that these expenses could not be termed as having the chargeability in which they were incurred. He took average of three years for such agreements and spread the expenses over a period three years thereby allowing 1/3rd expenditure incurred in that particular year. The matter was taken up in appeal and before the Commissioner of Income Tax (Appeals), the assessee questioned the aforesaid approach of the Assessing Officer by contending that in the course of its business, the assessee enters in the loan agreements of hire purchase which agreements are required to be stamped in accordance with the provisions of Indian Stamps Act. The stamp duty paid by the assessee is debited to agreement revenue expenditure. This entire process of getting stamped the agreements had been outsourced by the assessee to the Contract Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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