TMI Blog1999 (8) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... use of car for personal purpose and reimbursement of telephone expenses installed at their residence. In the course of assessment proceedings, the assessee claimed that the payment of insurance for accident policy, reimbursement of telephone expenses at the residence and medical reimbursement expenses were not perquisite for the purpose of section 40A(5) of the Income-tax Act (hereinafter referred to as "the Act"). The assessee incurred expenses of Rs. 1,08,877 on issue of bonus shares and claimed allowance thereof as revenue deduction. The Income-tax Officer disallowed the same as a capital expenditure on the ground that the issue of bonus shares can be treated towards the basic structure of the company and the expenditure involved broug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee to Mettur Beardsell Ltd., Madras, was an allowable deduction on the facts and in the circumstances of the case ?" ITR No. 377 of 1984 : This reference pertains to the assessment years 1977-78 and 1978-79. On the same grounds stated hereinabove in paragraph 2.3 above (but with the change of amounts and years), the following question was referred to this court : "Whether, on the facts and in the circumstances of the case, the assessee was entitled to deduction of Rs. 1,79,752 and Rs. 2,01,185 being the amounts paid to Mettur Beardsell Co. Ltd., for the user of its trade mark, namely, 'tebilized' in the assessment years 1977-78 and 1978 (1978-79 sic) respectively ?" Similarly, for the same grounds stated in paragraph 2.1 herei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... medical expenses to the managing director would fall within sub-clause (i) of clause (c) of section 40 and not under section 40A(5)(a) under which only expenditure incurred on a person in his capacity of an employee could be computed where such employee is also a director." Similar questions are raised in the aforesaid references. In view of the aforesaid view expressed by the court earlier, the answer must be in positive and in favour of the Revenue so far question No. 1 in ITR No. 315 of 1984 and question No. 2 in ITR No. 377 of 1984 are concerned. Question No. 2 in ITR No. 315 of 1984 : So far as question No. 2 in ITR No. 315 of 1984 is concerned, on an identical question in the case of CIT v. Ajit Mills Ltd. [1994] 210 ITR 658, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to make use of the particular process and the user of the trade mark "tebilized" did not create any asset nor did it confer any right of a permanent nature in favour of the assessee. The court further held that apart from the fact that the agreements in the present case do not confer any right for exclusive user, the duration of the agreement is for only eight years, that too terminable by six months' prior notice. The agreements merely enable the assessee to confer on the product the advantages of better quality and marketability. The payment of royalty in that case was, therefore, held to be clearly in the course of profit-earning process and not for acquisition of an asset or right of a permanent character. In the light o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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