PUTZMEISTER CONCRETE MACHINES PRIVATE LIMITED,GOA vs. DEPUTY COMMISSIONER OF INCOME TAX/, ASSISTANT COMMISSIONER OF INCOME-TAX/ASSESSING OFFICER, GOA

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ITA 325/PAN/2025Status: DisposedITAT Panaji20 May 2026AY 2017-186 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal admitted the additional evidence and restored the disputed issues to the CIT(A) for fresh adjudication. The assessee's grounds of appeal were allowed for statistical purposes.

What were the facts?

The assessee, a subsidiary of a German company, was disallowed a portion of its royalty payments by the Assessing Officer, who treated it as capital expenditure. The CIT(A) upheld this disallowance. The assessee appealed, arguing the royalty was revenue expenditure and sought to admit additional evidence.

What were the issues?

Whether royalty payments for technical know-how and trademark license are capital or revenue expenditure, and the admissibility of additional evidence before the Tribunal.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 250,Section 92CA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PANAJI BENCHES “DB” (VIRTUAL

Before: DR.MANISH BORAD & SHIR PAVAN KUMAR GADALE

For Appellant: Shri Ajit Jain.AR (Virtual)
For Respondent: Shri Senthil Kumar N., CIT DR
Hearing: 13.05.2026Pronounced: 20.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL

PANAJI BENCHES “DB” (VIRTUAL) BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER AND SHIR PAVAN KUMAR GADALE, JUDICIAL MEMBER आयकर अपील सं. / ITA Nos.324, 325, 326 and 327/PAN/2025 Assessment Years : 2016-17, 2017-18,2018-19 & 2020-21 Putzmeister Concrete Machines DCIT Circle 1(1) Pvt. Ltd, V/s Aayakar Bhavan, Verna Industrial Estate Panaji, South Goa, Goa-403001. Panaji-403722, PAN : AACCD2090G Appellant Respondent

Assessee by : Shri Ajit Jain.AR (Virtual) Revenue by : Shri Senthil Kumar N., CIT DR (Virtual) Date of hearing : 13.05.2026 Date of pronouncement : 20.05.2026 आदेश / ORDER PER PAVAN KUMAR GADALE, JUDICIAL MEMBER: These four appeals are filed by the assessee against the separate orders of the NFAC/CIT(A) passed u/sec 143(3) and 250 of the Income Tax Act. The assessee has raised grounds of appeal challenging the order of the CIT(A) sustaining the disallowance of royalty made by the Assessing Officer.

2.

Since the issues involved in these appeals are common, identical and similar and for the sake of convenience, we shall take up ITA 324/PAN/2025 for the Assessment Year 2016-17 as a lead case and facts narrated.

3.

The brief facts of the case is that assessee company is a wholly owned subsidiary of Putzmeister Concrete Pumps GmbH Germany. The assessee is primarily engaged in the assembly and

ITA Nos.324, 325, 326 and 327/PAN/2025 Putzmeister Concrete Machines Private Limited sale of concrete machines, batch mixing plants of various types and models used in the construction equipment industry. The assessee has filed the return of income for the A.Y. 2016-17 disclosing a total income of ₹.3,84,70,020/- under normal provisions of the Act and U/sec115JB of the Act of ₹. 11,21,23,402/-.Further, the assessee has filed the revised return of income for A.Y.2016-17 on 28.02.2018 as per APA Agreement with the CBDT disclosing a total income of Rs.14,47,59,180/- Subsequently, the case was selected for the scrutiny under the CASS and notice u/sec 143(2) and u/sec142(1) of the Act are issued along with questionnaire to substantiate the claims made in the return of income filed. In compliance, the Ld. Ld.AR of the assessee attended from time to time and submitted the details. The Assessing Officer(A.O) considered the information and find that the assessee has international transactions and therefore, the matter was referred to the Transfer Pricing Officer(TPO).Whereas the TPO has passed order u/sec 92CA of the Act on 26.06.2019 mentioning that the assessee has entered into Advance Pricing Agreement (APA) with CBDT on 05.12.2018 and the international transactions under reference are covered by the APA agreement entered into by the assessee company and regular Transfer Pricing (TP) audit is not undertaken and no TP adjustment is required in the assesse case.

4.

Further the A.O on perusal of audited financial statements found that the assessee has debited royalty payment and the assessee was called for to furnish the nature of payments along with copy of agreement and the A.O has issued show cause notice to treat the same as Capital Expenditure. In compliance to notice, the assessee has filed detailed explanations with supporting judicial decisions on 25.11.2019 referred as Para 5 of the order. The A.O dealt on the assessee’s contentions that the

ITA Nos.324, 325, 326 and 327/PAN/2025 Putzmeister Concrete Machines Private Limited royalty and trademark expenses are recurring in nature and the same are paid @ 3% and @ 0.75% of the net selling price and the A.O also dealt on the clauses of royalty agreement, the licensee’s right to knowhow, the patent rights and the trademarks of the licensor etc. The Assessing officer was not satisfied with the explanations and made analysis of the agreement on the various aspects with respect to the licensee, knowhow the scope of licence, nature of license, drawing and technical assistance and also modifications and improvement of knowhow and duration of contract and payment of royalty and relied on the judicial decisions and observed that the royalty expenditure incurred of Rs. 8,85,02,741/- is a capital expenditure and is providing long term benefit to the assessee and the same is treated as capital asset and allowed depreciation @25% of the intangible capital asset of Rs. 2,21,25,685/- and the balance amount of Rs. 6,63,77,056/- was disallowed. Similarly, the Ld.AO found that assessee could not explain the nature of Bad debts with supporting evidences and disallowed Rs. 35,25,407/-. Last disputed issue, due to a foreign exchange currency fluctuation, the assessee has claimed exchange loss and the A.O was not satisfied with the claim and made disallowance of exchange loss of foreign currency transactions of Rs.95,25,452/-.Finally the A.O assessed the total income of Rs. 22,41,87,100/-and passed the order u/sec 143(3) dated 23.12.2019.

5.

Aggrieved by the assessment order, the assessee has filed the appeal with the CIT(A), whereas the CIT(A) has considered the grounds of appeal, statement of facts, findings of the Assessing Officer and submissions of the assessee but sustained the disallowance of royalty paid and granted relief in other grounds of appeal and partly allowed the assessee’s appeal. Aggrieved by

ITA Nos.324, 325, 326 and 327/PAN/2025 Putzmeister Concrete Machines Private Limited the order of CIT(A), the assessee has filed the appeal before the Hon'ble Tribunal.

6.

At the time of hearing, the Ld.AR submitted that CIT(A) has erred in treating the amount of license and knowhow fee and trademark license fee as capital expenditure. The ld.AR submitted that assessee has obtained a factory licence in the year 2007 and commenced the manufacturing activity and the same is supported with the audited and financial statements. The contentions of the Ld.AR that there is no transfer of technology to the assessee for setting up a manufacturing facilities and payment of royalty is recurring in nature and there is no transfer of knowhow or technology and there is no long- term benefits or enduring benefits. Further Ld.AR made submissions that the assessee could not file vital documents to establish that the assessee factory has commenced its operations in the earlier years and the assessee has good case on merits with supporting evidences and the assessee has filed an application for the admission of Additional evidence under Rule 29 of the ITAT Rules and the Ld.AR substantiated the submissions with the factual paper book and judicial decisions and prayed for allowing the appeal. Per contra, the Ld.DR submitted that the additional evidences were not examined by the lower authorities and genuineness of transactions were not proved and the Ld. DR supported the order of the CIT(A).

7.

We heard the rival submissions and perused the material on record. The sole crux of the disputed issues envisaged by the Ld AR that the CIT(A) has erred in confirming the disallowance of royalty treating as the capital expenditure. The Ld.AR submitted that CIT(A) has erred in treating payment of royalty for technical knowhow and trademark as capital expenditure without appreciating that the assessee has entered into advance pricing agreement(APA) with CBDT for the year under consideration

ITA Nos.324, 325, 326 and 327/PAN/2025 Putzmeister Concrete Machines Private Limited dated 5.12.2018 and therefore, the payment of royalty is treated as revenue expenditure. The Ld.AR contentions are that the expenditure of royalty and trademark cannot relate to benefit of enduring nature and is not transferable and the Ld.AR emphasized on the facts that the assessee has obtained the factory license in the year 2007 and demonstrated the various factual aspects of working operations with supporting paper book. Further, the Ld.AR submitted that assessee has filed an application for admission of addition evidences under Rule 29 of the ITAT Rules i.e Form No. 4 “license to work a factory” issued on 16.11.2007 and the audited financial statements for the F.Y. 2007-08 which could not be submitted before the lower authorities. Further, the evidences play a very important role in decision making in the adjudicating proceedings, Therefore considering the facts, circumstances and additional evidences, the assessee should not suffer for non filing of material information, as the evidences play a vital role in decision making and admit the additional evidence. Accordingly, to meet the ends of justice, we restore the disputed issues along with the evidences to the file of the CIT(A) to verify and adjudicate afresh on merits and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information for early disposal of appeal. And, we allow the grounds of appeal of the assessee for statistical purposes.

8.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

ITA No.325/PAN/2025, 326/PAN/2025 & 327/PAN/2025

9..As the facts and circumstances in these three appeals are identical to ITA No.324/PAN/2025 for the A.Y 2016-17 (except variance in figures) and the decision rendered in above paragraph7&8 would apply mutatis mutandis for these appeals also. Accordingly, the grounds of appeal of the assessee are allowed for statistical purpose.

ITA Nos.324, 325, 326 and 327/PAN/2025 Putzmeister Concrete Machines Private Limited 10. In the result, the four appeals filed by the assessee are allowed for statistical purposes.

Order pronounced on this day of 20thMay 2026. Sd/- Sd/- (MANISH BORAD) PAVAN KUMAR GADALE ACCOUNTANT MEMBER (JUDICIAL MEMBER) पुणे/Pune; दिन ंक / Dated :20thMay, 2026 Abhishek Mohan आिेश की प्रतितलतप अग्रेतिि / Copy of the Order forwarded to : अपील र्थी / The Appellant. 1. प्रत्यर्थी / The Respondent. 2. 3. The Pr. CIT concerned. तिभ गीय प्रतितनति, आयकर अपीलीय अतिकरण, “DB” बेंच, 4. पणजी/ DR, ITAT, “DB” Bench, Panaji. ग र्ड फ़ इल / Guard File. 5. //True Copy// आिेश नुस र / BY ORDER,

Assistant Registrar आयकर अपीलीय अतिकरण, / ITAT, Panaji

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