TMI Blog2016 (9) TMI 1600X X X X Extracts X X X X X X X X Extracts X X X X ..... are also revenue expenditure within the meaning of Sec.37 of the Act in the nature of wholly and exclusively for the purpose of assessee s business. - I.T.A. No.1921/Mds/2016 - - - Dated:- 8-9-2016 - SHRI CHANDRA POOJARI AND SHRI G. PAVAN KUMAR, JJ. Appellant by : Shri. Shiva Srinivas, IRS, JCIT. Respondent by : Shri. R. Vijayaraghavan, Advocat ORDER CHANDRA POOJARI, J. The Revenue has filed an appeal against the order of the Commissioner of Income Tax (Appeals)-11, Chennai, dated 28.03.2016 for the assessment year 2005-2006. 2. The only grievance of the Revenue in this appeal is that ld. Commissioner of Income Tax (Appeals) erred in allowing the assessee appeal treating the logo charges as revenue in natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der, the assessee filed an appeal before Commissioner of Income Tax (Appeals). 4. In the appellate proceedings, the ld. Commissioner of Income Tax (Appeals) deleted the addition. Against this, the Revenue is in appeal before Tribunal. 5. We heard the rival submissions and perused the material on record. We are of the opinion that similar issue was considered by this Tribunal in assessee s own case in ITA Nos. 1791 to 1796/Mds/2011 1826 to 1830/Mds/2011 vide order dated 31.10.2012 observed as under:- 20. We have given our thoughtful consideration to the issue and also perused the relevant findings, contents of paper book referred and case law cited. Undisputed facts are that vide agreement in question, the assessee had agreed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods manufactured and marketed by TTK LIG and in relation to other business activities of TTK LIG. WHEREAS TTK had acceded to the request of TTK LIG to grant license and permission to TTK LIG to use the said monogram, subject to certain terms and condition, which terms and conditions in writing by this Deed of Agreement. WHEREAS both the parties hereto consider it necessary and expedient to record such terms and conditions in writing by this Deed of Agreement. NOW THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE MUTUAL COVENANTS AND OBLIGATIONS HEREIN CONTAINED, THE PARTIES HERETO AGREE AS FOLLOWS: 1. TTK hereby confirms having licensed and permitted the use of the said monogram by TTK-LIG for a period of thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to Government approval. 5. The renewal of this agreement may be effected by both the parties hereto by exchange of letters signed by persons duly authorized in this behalf. 6. In consideration of the said License and permission granted by TTK., TTK-LIG shall pay to TTK as nonrefundable license fee, a sum equivalent to two percent of the total sales of the company on quarterly rest. The above said agreement for using the monogram in question, was also approved by Department of Company Affairs, Ministry of Law, Justice and Company Affairs, Government of India vide letter dated 03.05.00, which is reproduced hereunder below:- 1. In exercise of the powers delegated to the undersigned by the Government of India under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the factum of payment made by assessee of logo charges @ 2% of the gross sales. The only strife is that per revenue, it is capital expenditure whereas the assessee s plea of treating it as a revenue expenditure stands accepted by CIT(A). We find that in exactly the similar circumstances, the Hon ble Delhi High Court in the case of G4S Securities System had held as under:- 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 know-how obtained by it under the agreement. The payment of royalty was also to be on year to year basis on the net sales of the assessee and at no point of time was the assessee en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated as revenue expenditure and not capital expenditure. The assessee was required to pay royalty every year. But for payment of royalty, every year the assessee could not continue receiving the license to use the licenses marks on the products manufactured by it. Thus making payment every year it cannot be said that the assessee received advantage of enduring nature primarily to bring it as capital expenditure. Taking cue from the same, we hold that in the instant case also, title of the logo in question has not passed over to the assessee. Further, there is no acquisition of assets or part of any capital asset. Usage of logo by the assessee is only for displaying it on the product manufactured i.e. rubber contraceptives. That too, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
