TMI Blog2016 (10) TMI 1239X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is entitled to become the exclusive owner of know-how and the trademark. - Decided against revenue - ITA Nos.1267/Del/2014 & 5884/Del/2014 - - - Dated:- 19-10-2016 - SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER Appellant by : Shri Piyush Jain, CIT-DR. Respondent by : Ms. Bhavita Kumar, Advocate. ORDER PER G.D. AGRAWAL, VP :- These appeals by the Revenue for the assessment years 2008-09 and 2009-10 are directed against the order of learned CIT(A)-2, Faridabad dated 27.12.2013 and 29.08.2014. 2. In both these years, the Revenue has raised common grounds of appeal except the difference in the amount of disallowance. The grounds raised in assessment year 2008-09 read as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell the products for the limited period as provided in the agreement and after the termination of this agreement, all rights of the assessee shall return to Mitsubishi. During the year under consideration, the assessee made the payment of royalty amounting to `1,50,50,557/-. The same was disallowed by the Assessing Officer treating it to be capital in nature. On appeal, learned CIT(A) allowed the same. Hence, this appeal by the Revenue. 4. We have heard the arguments of both the sides and have perused the material placed before us. At the time of hearing before us, it was pointed out by the learned counsel that for first five years i.e. assessment year 2001-02 to 2005-06, the Revenue has accepted the royalty payment as revenue expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Delhi). (v) Climate Systems India Ltd. Vs. CIT [2009] 319 ITR 113 (Delhi). (vi) CIT Vs. G4S Securities System (India) P.Ltd. [2011] 338 ITR 46 (Delhi). (vii) Shriram Refrigeration Industries Ltd. Vs. CIT, Delhi-I 127 ITR 746. (viii) Shriram Pistons Rings Ltd. Vs. CIT [2008] 171 Taxman 81 (Delhi). (ix) Praga Tools Ltd. Vs. CIT [1980] 123 ITR 773 (AP). (x) CIT Vs. Avery India Ltd. [1994] 207 ITR 813 (Calcutta). (xi) Maruti Suzuki India Ltd. Vs. Addl.CIT [2015] 60 taxmann.com 411 (Delhi-Trib). (xii) LG Electronics India Pvt.Ltd. Vs. ACIT Order dated 08.12.2014 of ITAT in ITA No.5140/Del/2011. 5. Learned DR, on the other hand, has relied upon the order of the Assessing Officer. 6. We have caref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. 7. The ratio of the above decision would be squarely applicable to the facts of the assessee s case. Moreover, Hon'ble Delhi High Court in the case of CIT Vs. G4S Securities System (India) P. Ltd. (supra), held as under :- Held, dismissing the appeals, that the ownership rights of the trade mark and know-how throughout vested with the foreign company and on the expiration or termination of the agreement the assessee was to return all the knowhow obtained by it under the agreement. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted a recent decision of the Advanta India Ltd. (TS 590-HC-2015 (TEL AP) wherein the Hon ble High Court has distinguished Alembic Chemical Works and held in favor of capitalization of of payment for know-how only as capital in nature, on facts where the taxpayer acquired a living organism germplasm used to produce revenue generating products. But, even here the royalty paid was confirmed as a revenue expense. Having examined the Agreement governing Royalty, and the terms of its payment in light of the principles laid down by the Supreme Court and High Court and in due deference to decisions in the case of Alembic Chemical Works Co Ltd v CIT, 177 ITR 377 (SC) supra and Delhi High Court in the case of CIT v JK Synthetics Ltd 309 ITR 37 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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