INCOME TAX OFFICER, CHENNAI vs. INDIAN ADDITIVES LIMITED, CHENNAI

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ITA 282/CHNY/2026Status: DisposedITAT Chennai04 August 20263 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue of royalty payments was squarely covered by previous orders of co-ordinate benches in favour of the assessee. The Revenue failed to produce any High Court order setting aside these previous decisions.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting the disallowance of royalty payments. The CIT(A) had allowed the assessee's appeal, following previous ITAT orders. The Revenue argued that these previous orders were sub-judice before the High Court.

What were the issues?

Whether royalty payments made to a foreign company are allowable as expenditure when similar issues for earlier years were decided in favour of the assessee by ITAT, despite being under challenge before the High Court.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI

Before: HONOURABLE SHRI GAGAN GOYAL & SHRI MANU KUMAR GIRI

Hearing: 29.07.2026Pronounced: 04.08.2026

आयकर अपीलीय अधिकरण ’डी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH: CHENNAI माननीय श्री गगन गोयल लेखा सदस्य के समक्ष एवं श्री मनु कुमार धगरर, न्याययक सदस्य BEFORE HONOURABLE SHRI GAGAN GOYAL, ACCOUNTANT MEMBER AND SHRI MANU KUMAR GIRI, JUDICIAL MEMBER आयकर अपील सं./ITA No. 282/Chny/2026 यनिाारण वर्ा /Assessment Years: 2015-16 The Income Tax Officer, v. Indian Additives Limited, Corporate Ward-1(3) No.265, Express Highway, Chennai. Manali S.O, Tiruvallur Dist., Chennai-600 068. [PAN: AAACI1445G] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : None प्रत्यर्थी की ओर से /Revenue by : Mr. K. Jayaganesh, CIT Ld. DR सुनवाईकीतारीख/Date of Hearing : 29.07.2026 घोषणाकीतारीख /Date of Pronouncement : 04.08.2026 आदेश / O R D E R PER GAGAN GOYAL, AM: This is an appeal preferred by the Revenue against the order of Ld. Commissioner of Income Tax (A)-16, Chennai, (hereinafter referred as the ‘Ld. CIT(A)’) dated 29.08.2025 for the Assessment Year (hereinafter referred as the ‘AY’) 2015-16.

GROUDS OF APPEAL

1.

The Order of the Ld.CIT (A) is contrary to law, facts and circumstances of the case and hence not sustainable. 2. The Ld. CIT(A) erred in deleting the disallowance of royalty payments made to Chevron Oronite Company LLC, USA, without appreciating that the allowability of such royalty expenditure is subject matter of further appeal before the Hon'ble High Court of Madras in the assessee's own case for earlier assessment years and has not reached finality.

ITA 282/Chny/2026 (2015-16) Indian additives ltd 3. The Ld. CIT(A) erred in allowing relief merely by following ITAT orders of earlier years, ignoring the fact that the said orders are sub-judice and therefore cannot be treated as conclusive or binding for the year under consideration. 4. The Ld. CIT(A) failed to adjudicate the issue of royalty payment on independent merits for AY 2015-16 and erred in granting relief without examining the nature, necessity, and commercial expediency of the expenditure. 5. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT (A) may be set aside and that of the Assessing Officer restored.

2.

The brief facts of the case are that the assessee is a company filed its original return of income on 03.11.2015 declaring total income at Rs. 43,91,90,010/- and also filed the revised return on 23.11.2016 for the same figure. The case of the assessee was selected for scrutiny under CASS. Ultimately, the case of the assessee was assessed after making additions on account of TP adjustment amounting to Rs. 5,60,88,000/- and Rs. 4,87,80,760/- on account of disallowance of royalty payments. The assessee being aggrieved with an order preferred an appeal before the Ld. CIT (A), Chennai, who in turn allowed the appeal of the assessee, now the Revenue being aggrieved preferred the present appeal before us.

3.

We have gone through the order of the AO, order of the Ld. CIT (A) and written submissions of the assessee along with grounds taken by the Revenue. It is observed that as far as the addition of Rs. 5, 60, 88,000/- on account of TP adjustment is concerned, order of Ld. CIT (A) is not under challenge as the Revenue has not raised any ground against the same. As far as second addition of Rs. 4,87,80,760/- on account of royalty payments made to Chevron Oronite Company LLC, USA, is concerned it is observed that the similar issue in the case of the assessee has been decided in favour of the assessee from A.Y.s 1999-2000 to 2006-07, 2008-09 and 2011-12 to 2014-15 by Co-ordinate Benches. Copies of the orders are also filed before us for our perusal. We have gone through the orders of the Co-ordinate Benches on this issue as submitted before us and find that the issue before us is squarely covered by the orders of the Co-ordinate Benches as mentioned (supra).

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ITA 282/Chny/2026 (2015-16) Indian additives ltd 4. As far as the plea of the Revenue that the matter against the decisions of the Co-ordinate Benches are under challenge before the Hon’ble jurisdictional High Court is concerned, it is observed that the Revenue is failed to produce any order of the Hon’ble jurisdictional High Court where the order of the Co-ordinate Benches are either set aside or any other direction given on the issue under consideration. Hence, in the light of above discussion we do not find any infirmity in the order of the Ld. CIT (A) and the same is confirmed, resulting into dismissal of the grounds taken by the Revenue. 5. In the result, the appeal of the Revenue is dismissed in view of above facts and observations. Order pronounced on the 4th day of August, 2026, in Chennai.

Sd/- Sd/- (मनु कुमार गिरर) (गगन गोयल) (MANU KUMAR GIRI) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated: 4th August, 2026. KB आदेश की प्रयतललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem 4. पवभागीय प्रयतयनधि/DR 5. गार्ड फाईल/GF Digitally signed K BABU by K BABU Date: 2026.08.07 10:09:12 +05'30'

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