COMMISSIONER OF INCOME TAX vs. CENTITECH INDIA PVT LTD

ITA - 1249 / 2010HC Delhi30 August 20101 pages

For Petitioner: PL BANSAL

AI SummaryDismissed

What did the High Court hold?

The High Court held that it did not perceive any perversity of approach in the Tribunal's conclusion. The Tribunal had concurred with the CIT(A)'s order. The reasoning was based on the consistent treatment of similar technical know-how payments as revenue expenditure in earlier years, the seven-year period for which the know-how was availed, and the allowance of the same expenditure in subsequent assessment years. The High Court found no merit in the Revenue's appeals. The operative direction was that the appeals stand dismissed in limine, meaning at the outset without a detailed hearing on merits.

What were the facts?

The appeals were filed by the Commissioner of Income Tax (Revenue) against the order dated 22.04.2009 passed by the Income Tax Appellate Tribunal (Tribunal). The Tribunal's order pertained to assessment years 2001-02 and 2002-03 for the assessee, Centitech India Pvt Ltd. The dispute concerned the treatment of royalty payments made by the assessee to M/s Roulands Fabriker, Denmark, for technical assistance. The Tribunal, concurring with the CIT(A), had treated these payments as revenue expenditure. It was noted that for several earlier years, similar technical know-how payments were treated as revenue expenditure. The technical know-how was availed for seven years, and for subsequent assessment years (2003-04 and 2004-05), the same expenditure was also allowed. The High Court was hearing these appeals.

What were the issues?

1. Whether the amount paid by the assessee towards royalty to M/s Roulands Fabriker, Denmark, for availing technical assistance is a revenue expenditure (question of law). The Revenue argued that the Tribunal's order was perverse. The Assessee did not present any arguments as recorded in the judgment. The Tribunal, in its order, had referred to the CIT(A)'s finding that for a number of earlier years, the technical know-how for which royalty was paid was treated as a revenue expenditure. It was also noted that the technical know-how was availed for a period of seven years, and for subsequent assessment years, the same had been allowed. The Revenue's contention was that the Tribunal's conclusion was perverse, implying a disagreement with the Tribunal's classification of the expenditure.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF DELHI AT NEW DELHI 1. ITA 1249/2010 . COMMISSIONER OF INCOME TAX ..... Appellant Through: Mrs. Prem Lata Bansal, Adv. . versus . CENTITECH INDIA PVT LTD ..... Respondent Through: None . 2. ITA 1251/2010 . COMMISSIONER OF INCOME TAX ..... Appellant Through: Mrs. Prem Lata Bansal, Adv. . versus . CENTITECH INDIA PVT LTD ..... Respondent Through: None . CORAM: . . HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE MANMOHAN . O R D E R 30.08.2010 . In these two appeals, the assail is to the order dated 22.4.2009 passed by the Income Tax Appellate Tribunal, Delhi Bench-B (for short ?the tribunal?) in ITA No. 2325 and 2326/DEL/2008 pertaining to the assessment years 2001-02 and 2002-03. The revenue has treated the amount paid by the assessee towards royalty to M/s Roulands Fabriker, Denmark for availing ITA Nos. 1249/10 and 1251/10 Page 1 of 2 technical assistance as a revenue expenditure. Be it noted, the tribunal has referred to the order passed by the CIT(A) who has taken note of the fact that for number of earlier years, the said technical knowhow for which royalty was paid was treated as a revenue expenditure. It was also acceded to before us that the said technical knowhow was availed of for a period of seven years. That apart, in respect of the subsequent assessment years, namely, 2003-04 and 2004-05, the same has been allowed. In view of the aforesaid analysis made by the tribunal by which it has concurred with the CIT(A), we do not perceive any perversity of approach in its conclusion. In the result, we do not find any merit in these appeals and accordingly, the same stand dismissed in limine. . . . CHIEF JUSTICE . . . MANMOHAN, J AUGUST 30, 2010 pk . . . ITA Nos. 1249/10 and 1251/10 Page 2 of 2 .

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