C.I.T. vs. M/S.ACQUA MINERALS P.LTD.

ITR/3/2003HC GujaratGJHC24025659200312 November 2014Author: HONOURABLE MR. JUSTICE KS JHAVERI,HONOURABLE MR. JUSTICE K.J.THAKER6 pages
AI SummaryRemanded

Facts

The assessee, M/s. Acqua Minerals Pvt. Ltd., claimed a royalty payment of Rs. 2,90,602/- to M/s. Parle (Export) Pvt. Ltd. for the use of the trademark 'Bisleri' for assessment year 1989-90. The Assessing Officer (AO) treated this payment as for the acquisition of a 'patent right' and restricted the allowance to 1/4th of the claim under Section 35A of the Income Tax Act, 1961. The Commissioner of Income Tax (Appeals) deleted this disallowance. The revenue appealed to the Income Tax Appellate Tribunal (ITAT), which upheld the CIT(A)'s order. The revenue then filed an application for reference, and the ITAT referred a question of law to the High Court.

Held

The High Court held that the Tribunal was right in law and on facts in confirming the order of the CIT(A) deleting the disallowance. The Court reasoned that the assessee used the term 'Bisleri' for selling its own goods, and therefore, the payment made could not be covered within the provisions of Section 35A. Instead, it was to be allowed as a revenue deduction for compensation or royalty for the use of the term 'Bisleri' in the goods sold by the assessee. The Court found itself unable to take a view contrary to the Tribunal's decision, which had followed its own prior order for AY 1988-89. The question of law was answered in favour of the assessee and against the revenue. The reference was disposed of accordingly.

Key Issues

1. Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) deleting the disallowance of Rs. 2,90,602/- made under the provision of Section 35A? Assessee's Contention: Not recorded in the judgment. Revenue's Contention: The revenue, through its learned advocate Mr. Nitin Mehta, strongly urged that the orders of the authorities below were perverse and against the principles enunciated under Section 35A. The revenue submitted that the order passed by the Assessing Officer was just and proper. The revenue relied on the provisions of Section 35A of the Act.

Sections Cited

35A

AI-generated summary — verify with the full judgment below

O/ITR/3/2003 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE NO. 3 of 2003

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE KS JHAVERI

and HONOURABLE MR.JUSTICE K.J.THAKER

================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ C.I.T.....Applicant(s) Versus M/S.ACQUA MINERALS P.LTD.....Respondent(s) ================================================================ Appearance: MR NITIN K MEHTA, ADVOCATE for the Applicant(s) No. 1 NOTICE UNSERVED for the Respondent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE

The order continues below.

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