9911796707
TMI Blog2020 (9) TMI 1190X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is not in nature of capital expenditure whereas the assessee company has acquired the rights for the sale of products belonging to the specific brands." 3. The assessee filed C.O. in support of the order of CIT (Appeals). The assessee has raised various grounds supporting the order of CIT (Appeals). 4. The facts of the case are that the assessee claimed to the extent of Rs. 2,50,26,758 under Section 37 of the Income Tax Act, 1961 ('the Act') being payment of franchisee fees. This was disallowed by the Assessing Officer by observing that the assessee has entered into Agreement to acquire the rights for sale of products belonging to the specific brands with Bossini Garment Limited, Vinicciladies Specialities Centre Sdn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as discussed earlier which is the payment of franchisee fees as follows : 1. Bossini Garment Limited 5% of Gross Sales 2. Josef Seibel Asia Pacific Limited Euro 2 per pair of footwear sold 3. Vincciladies Specilities Centre Sdn Bhd 2% of Net Sales 4. Basic Properties BV (Kappa) 5% of Net retail turnover or 10% of net wholesale turnover. The above payments based on certain percentage of sales by the assessee. The parties with whom the assessee has entered into Agreement has not transferred any business or commercial rights with enduring benefits to the assessee. The assessee cannot be said to have any enduring benefit by entering into these agreements. These are in the nature of day to day operations of the assessee's b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come to the conclusion that under the agreement with the foreign firm what was set up by the assessee was a new business and the foreign firm had not only furnished information and the technical know-how but rendered valuable services in setting up of the factory itself and even after the expiry of the agreement there is no embargo on the assessee to continue to manufacture the product in question, it is difficult to hold that the entire payment made is a revenue expenditure merely because the payment is required to be made on a certain percentage of the rates of the gross turnover of the products of the income as royalty. In the facts and circumstances of the case the High Court was fully justified in answering the question whether the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
