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TMI Blog2025 (5) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") dated 20.12.2018 by the Assessing Officer, Addl. CIT, Special Range-3, New Delhi (hereinafter referred to as "ld. AO"). 2. The assessee has raised the following grounds of appeal:- "1. That the Commissioner of Income Tax (Appeals) ["CIT(A)'] erred on the facts and in law in confirming action of the assessing officer in disallowing royalty and interest payments aggregating to Rs. 14,48,93,346 made by the appellant during the relevant assessment year, alleging the same to be prior period expenditure. 1.1. That the CIT(A)/ assessing officer erred on facts and in law in not appreciating that since liability in respect of aforesaid expense crystallized during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of manufacturing consumer durables, electronic equipment, sub assembling thereof as well as other electronic items. The assessee filed its return of income on 30.11.2016 declaring income of Rs. 17,15,75,120/- under the normal provisions of the Act and book profit of Rs. 27,47,61,092/- u/s 115JB of the Act. Since tax liability under MAT provisions was higher than normal provisions, tax was paid on book profit. The scrutiny assessment u/s 143(3) of the Act was completed vide order dated 20.12.2018 determining the total income at Rs. 32,09,48,830/- under the normal provisions of the Act and Rs. 27,92,41,459/- under MAT provisions, after making the following additions/ disallowances:- Disallowance u/s 14A of the Act both under Normal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 841.28 Increment between standard royalty rate and the compliant royalty rate for 341,749 DVD Video Players reported upto 30.09.2013 3,33,415.40 Interest in accordance with clause 4.8 on the payments specified above for unreported sales for period upto 30.11.2013 87,99,269,57 Payment related to the increment between the standard royalty rate and the compliant royalty rate 11,56,364.05 Total 1,35,72,890.30 6. Pursuant to the aforesaid notice, the parties amicably negotiated and settled the dispute vide letter dated 23.04.2015 issued by Philips specifying the terms of settlement which was countersigned by the assessee. It is respectfully submitted that pursuant to the settlement, the assessee had agreed to pay USD 2,200,000 to Philip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld CIT(A) vide order dated 10.06.2019, confirmed the disallowance of royalty and interest payments on the following grounds:- a) Settlement agreement entered into between the assessee and Philips is not on stamp paper; b) The assessee failed to explain why it did not pay/ made provision in books in respect of the Royalty to Philips which it is paying now; c) The assessee did not explain how the Royalty and interest has been computed. 8. The assessee pleaded that it has been carrying on sale of DVD players every year and which has been consistently allowed as revenue expenditure in the earlier years. It was submitted that genuineness of the payment/ transaction has never been doubted by the revenue. It was also pointed out that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Appellate Tribunal Rules, 1963 containing certain additional evidences as under:- Particulars Page No. of the Paper Book 1. Copy of DVD Video Player and DVD ROM Player Patent License Agreement dated 10.10.2005 160-178 2. Video CD Player Patent License Agreement dated 10.10.2005 179-19 3. Side letter dated 10.10.2005 relating to Philips Video CD Player Patent License Agreement; Video CD playback functionality incorporated in DVD Video Players 197-19 4. MPEG Audio Patent License Agreement dated 10.10.2005 199-200 5. Side letter dated 10.10.2005 with regard to the above agreements on conditional applicability of "compliant rates" for past use, etc. 201-203 6. Communication w.r.t. default between the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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