TMI Blog2015 (8) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... y right acquired by him, namely, the brand name/trade-mark phoneytunes.com. He had not assigned the same to the assessee, but only licensed the same to the assessee. Assessing Officer and the CIT (Appeals) wrongly came to the conclusion that Tarun Mohan being a Director of the respondent was not entitled to enter into an agreement for the transfer of his assets to the company. They held that the same person cannot enter into an agreement with himself. This ignores the fundamental concept that the assessee being a company incorporated under the Companies Act, 1956 is a separate legal juristic entity. The Tribunal, therefore, rightly disagreed with this finding. The Tribunal also rightly observed that Tarun Mohan had in any event paid the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issed the respondent/assessee s appeal against the order of the Assessing Officer adding back the amounts paid by the assessee to one Tarun Mohan by way of royalty for the use of the brand name phoneytunes.com. 3. According to the appellant, the following substantial questions of law arise in these cases:- (i) Whether on the facts and in the circumstances of the case and in law, the Hon ble ITAT is justified in holding that royalty payment to a related person would be allowable for business expenditure u/s 37(1) of the Act whereas the same has not been exclusively and wholly incurred for business purposes? (ii) Whether on the facts and in the circumstances of the case and in law, the Hon ble ITAT is justified in holding that royalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ones, images, wall papers etc. He had entered into agreements with various music companies under which he acquired their rights as also the right to make ring tones on the basis thereof. In turn, he provided individual mobile users the tones through cellular operating companies. He paid royalty to the music companies in consideration of these agreements. He in turn was remunerated by collecting fees from the customers for downloading the ring tones etc. The Tribunal has come to a finding of fact that the said Tarun Mohan had invented technology through which ring tones can be created of the said songs. Whether it was an invention or not is not relevant. The fact is that he devised the manner of providing the said services. It appears that T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han, sole proprietor of PT a purchase price or consideration of a sum of ₹ 5,81,231/- and in consideration of all intellectual property rights (other than brand name) and for the use of brand name of phoneytunes.com a consideration of 2% of the gross revenue receipts under the relevant business after 2 years of closing date. 6. It is clear, therefore, that Tarun Mohan retained the brand name phoneytunes.com. He merely permitted the assessee to use the intellectual property right acquired by him, namely, the brand name/trade-mark phoneytunes.com. He had not assigned the same to the assessee, but only licensed the same to the assessee. 7. The Assessing Officer and the CIT (Appeals) wrongly came to the conclusion that Tarun Mohan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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