TMI Blog2018 (5) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... to be recognized only over the validity of tenure of the agreement which has been rightly done by the assessee. Hence we have no hesitation to direct the AO to delete the addition - Decided in favour of assessee. - I.T.A No. 1374/Kol/2016 - - - Dated:- 15-5-2018 - Shri A.T.Varkey, JM And Shri M.Balaganesh, AM For The Appellant : Shri Subash Agarwal, Advocate For The Respondent : Shri Saurabh Kumar, Addl. CIT (DR) ORDER Per M.Balaganesh, AM 1. This appeal by the assessee arises out of the order of the Learned Commissioner of Income Tax(Appeals)-15, Kolkata [in short the ld CIT(A)] in Appeal No.325/CIT(A)- 15/14-15/7(1)/Kol dated 21.03.2016 against the order passed by the I.T.O., Ward-7(1), Kolkata [ in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to this both assessee as well as the franchise partner shall be jointly the lessees of the premises. The agreement also provided that the development of the premises including the interior of the clinic in the leased premises for the establishment of Vibes clinic shall be the sole responsibility of the franchise partner. The franchise partner had to install equipments as per the specifications provided by the assessee. The designs of most of the branded equipments belonged to the assessee and the franchise partner as per the agreement, had to purchase the equipments together with designs which are the proprietory configuration of the assessee. The agreement further provided that no part of these equipments would be modified, copied or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( e) Financial accounting and auditing of the Clinic. ( I) Assist the Party of the Second Part and the Clinic in procurement of equipment as specified in Clause- 2. ( g) To purchase standard quality consumables, linen accessories to maintain quality and uniformity of all VIBES Clinics. Responsibilities of Party of Second Part ( a) To cooperate and coordinate the Party of the First Part in smooth administration and overall management of the Clinic. ( b) To procure and install the equipment as specified by the party of the first part in the Premises. ( c) To take the Premises on lease for a minimum period of 5 years or to give the self owned premises on lease for establishment of the Clinic for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity and non-competition provisions/covenants specified in clause 11 below. The assessee though received a sum of ₹ 22,00,000/- apportioned a sum of ₹ 1,91,666/- as income for the year under consideration and treated the remaining portion of ₹ 20,08,334/- as a good will shown in the liability side of the balance sheet. The break-up of the income recognition done by the assessee is as under : JV for Centre at Bangalore : Rs.1,58,333/- JM for Girish Park at Kolkata : Rs. 33,333/- Rs.1,91,666/- The amount shown in the liability side of the balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. That the appellant craves leave to add, alter or delete all or any of the grounds of appeal. 4. We have heard the rival submissions. The facts stated herein above remain undisputed and hence are not reiterated for the sake of brevity. It is not in dispute that the subject mentioned receipt of ₹ 22,00,000/- is a revenue receipt. The only dispute is that whether the entire ₹ 22,00,000/- accrued as income to the assessee during the year itself or it is to be spread over a period of five years. We have perused the copy of the subject mentioned agreements in lieu of which the assessee received consideration of ₹ 22,00,000/-. These agreements are enclosed from pages 15 to 46 of the paper book. From the perusal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) royalties charges for the use of such assets as know-how, patents, trade mark and copyrights; ( iii) dividends rewards from the holding of investments in shares. 8.2. Interest accrues, in most circumstances, on the time basis determined by the amount outstanding and the rate applicable. Usually, discount or premium on debt securities held is treated as though it were accruing over the period to maturity. 8.3. Royalties accrue in accordance with the terms of the relevant agreement and are usually recognized on that basis unless, having regard to the substance of the transactions, it is more appropriate to recognize revenue on some other systematic and rational basis. 8.4. Dividends from investments in shares ..... X X X X Extracts X X X X X X X X Extracts X X X X
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