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TMI Blog2006 (3) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... directing the Assessing Officer to exclude the leave travel concession and medical insurance premium in computing the disallowance under section 40(c)?" In the course of assessment proceedings for the assessment year 1985-86, the assessee claimed allowance of Rs. 62,056 being payment made to Mettur Beardsell Limited for using the trade mark "Tebilized" on the ground that it was revenue expenditure. The assessee also claimed that the amounts of leave travel concession and medical insurance premium paid by the company for the benefit of the managing director should not be taken into consideration for the purpose of calculating disallowance under section 40(c) of the Income-tax Act, 1961. These two claims were rejected by the Income-tax Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficiently and more profitably, while leaving the fixed capital untouched. The High Court, therefore, held that the agreement permitting the assessee to make use of the particular process and the user of the trade mark "Tebilized" did not create any asset nor did they confer any right of a permanent nature in favour of the assessee and as the payment of royalty was clearly in the course of the profit-earning process and not for acquisition of an asset or right of a permanent character, it was deductible as revenue expenditure. Having regard to the principles laid down by the High Court in the above quoted decision, this court is of the opinion that the Appellate Tribunal was justified in deleting the disallowance being technical service fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation of the director himself to pay and not that of the company, qua the insurance company, then that would amount to a benefit to the director within the meaning of section 40(c) of the said Act. In the present case, it was not shown that the director himself wanted to take out the policy or that it was his own obligation to pay the premium and no such contention was canvassed before the lower authority. The amount of premium was Rs. 1,182 for each of the two managing directors and Rs. 1,191 for the third managing director. The premiums were paid directly by the company which had taken out the policies in respect of the three directors. Therefore, the Tribunal was right in holding that the personal accident insurance premium was not mean ..... X X X X Extracts X X X X X X X X Extracts X X X X
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