TMI Blog2013 (5) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... pon. Royalty Payment- A Revenue or Capital Expenditure? - In a Royalty agreement it was mentioned that in the event of termination or expiry of the agreement the licensed products were not to be manufactured nor was its trademarks to be used and all to be returned to the licensor. - HELD THAT: - Assesse has derived no enduring benefit nor has assessee obtained any capital asset on the basis of the payment of the royalty as per the agreement. Thus, it cannot be treated as a capital expenditure. - ITA Nos. 1826 & 1827& 1828/Kol/2012 & C.O. Nos. 10 & 11/Kol/2013 - - - Dated:- 23-5-2013 - Sri K.K.Gupta, AM Sri George Mathan, JM For the Appellant: Shri L.K.S.Dehiya, CIT DR For the Respondent: Shri S.Jhajharia, FCA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n facts and in the circumstances of the case, the ld. CIT(A) erred in allowing depreciation on river embankment under the block of assets Building . 3. That the appellant craves leave to add, alter, modify or amend any ground of appeal during the course of hearing of the case. 5.1. In the Cross Objection the assessee has raised the following grounds :- 1. For that in view of the facts and circumstances of the case, the ld. CIT(A) erred in confirming the action of the AO in treating ₹ 1,10,85,490/- of royalty payment as capital expenditure and such expenditure being fully allowable revenue expenditure it may kindly be held accordingly. 2. For that your petitioner craves the right to put additional grounds and. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s covered by the decision of the coordinate bench of this Tribunal referred to supra and the ld. CIT(A) has only followed the decision of the Coordinate Bench of this Tribunal in assessee s own case. We find no error in the findings of the ld. CIT(A) which call for any interference. 8. In the result ground no.1 in the Revenue s appeal stands dismissed. 9. In regard to ground no.2 of the revenue s appeal it was submitted that the issue was against the action of the ld. CIT(A) in allowing the depreciation on river embankment under the block of assets Building . 10. It was submitted by the ld DR that the AO had disallowed the depreciation on the river embankment and the renovation as it was not a building, nor road or bridge or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 15. In the Cross Objection it was submitted by the ld. AR that the issue was against the action of the ld. CIT(A) in not allowing the royalty payment as revenue expenditure. 16. The ld. AR drew our attention to the royalty agreement which was at pages 8 to 28 of the paper book. He drew our attention to para 2.5 of the agreement which specifically says that all the drawings and other documents comprising the technical knowhow and all notes and copies made there from by licensee shall be marked with the words Secret and Confidential-property of Wolverine World Wide, Inc. . He further drew our attention to Article 6.1 wherein it has been agreed that the technical know-how imparted to licensee is and shall remain the exclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, INC. Thus as the assessee has derived no enduring benefit the same cannot be treated as a capital expenditure but is clearly in the name of revenue expenditure and allowable. In the circumstances the AO is directed to allow the royalty paid by the assessee as revenue expenditure as claimed. 19. In the result the Cross Objection filed by the assessee stands allowed. 20. In ITA No.1827/Kol/2012 the revenue has raised the following grounds :- 1. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in holding that contributions made by the assessee to Bata Workers Sickness Benefit Society is an allowable expenditure even though the Society in neither a body referred to u/s 36(1)(iv) or (v) and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his ground also. Consequently the said ground stands dismissed. 24. In the result the appeal of the Revenue stands dismissed. 25. In respect of the Cross Objection it was fairly agreed by both the sides that this issue was identical to Cross Objection of the assessee s appeal in C.O.No.10/Kol/2013 for A.Yr.2005-06. Consequently our finding therein will apply to this ground also. Consequently the said ground stands allowed. In the result the Cross Objection of the assessee stands allowed. 26. In ITA No.1828/Kol/2012 the revenue has raised the following grounds :- 1. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in deleting the addition made on account of delayed payment of Employees contri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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