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TMI Blog2016 (4) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... fuel solutions for various OEMs and the replacement market. The company has been supplying LPG Kits to Maruti Udyog Ltd. The return of income in this case was filed on 25.9.2009 declaring an income of Rs. 7,89,84,290/-. The case was processed u/s 143(1) of the Income-tax Act and subsequently selected for scrutiny. 3. The assessee company was incorporated in India on July 24, 2004 in the name of M/s. Minda Impco Ltd., as a joint venture between the Minda Group of India and Impco of USA. The company was incorporated to manufacture and trade in CNG and LPG kits and parts thereof in the automotive sector. In the early part of 2006, the partnership broke and the stake from the foreign partner was acquired by the Minda Group. Consequently, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ressed. Hence, the same is dismissed. 8. The only issue remaining for adjudication now is the issue of royalty amounting to Rs. 1,81,91,663 disallowed by the Assessing Officer under the provisions of section 40A(2)(a)/(b) of the Income Tax Act, 1961. Ld. DR submitted that this payment is not business expenditure because Minda Autogas Ltd. already has title 'Minda' prefixed to it. This title was there even when it was functioning under the name of Minda Impco Ltd. So there is no question of making any payment for the Goodwill or Brand name of Minda Industries Ltd. As this expenditure has not been incurred for earning revenue during this year i.e. it has not been incurred for the business purpose it is not an allowable expenditure. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a 6.6 of his order which are being reproduced below:- "6.2 The appellant also filed a copy of the order passed by me for A.Y. 2007-08 in appeal no. 113/09-10, wherein this issue has been discussed in detail on pages 9 to 15 in para nos. 6.0 to 6.10. 6.3 on being asked about the reduction in the rate of royalty from 5% to 2.5%, the Id. AR submitted that in the A.Y. 2007-08, the rate of 5% was agreed because the initial efforts put in by M/s. Minda Industries Ltd. were much more to get an entry into Maruti Udyog Ltd. However, during the year under consideration, there were routine technical and supervisory services which were important for the appellant apart from continued patronage of Maruti Udyog Ltd. It was also explained that pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xxxxxxxx 6.5 I have carefully gone through the written submissions of the AR, reasoning of the AO and the facts of the case on the record. Since, the facts and the circumstances under which the royalty was paid by the appellant to one of the group concerns as well as the reasoning of the Ld. AO and the submissions of the Ld. AR are identical. I find no reason to differ from my own decision on this issue in the appellant's own case for the A.Y. 2007-08 in appellant no. 113/09-10. I also agree with the contention of the Ld. AR that reduction in the rate of royalty from 5% to 2.5% on the sales made to M/s Suzuki India Ltd. during the year also indicates the genuineness of commercial arrangement and it is not an attempt to pass profits f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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