ACIT CORPORATE CIRCLE 6(1)(I/C), CHENNAI vs. SHRIRAM CHITS TAMILNADU PVT LTD., CHENNAI

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ITA 810/CHNY/2019Status: DisposedITAT Chennai26 August 2019AY 2014-153 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, relying on its own previous order in the assessee's own case for a prior assessment year. The Tribunal stated that the pendency of a High Court appeal does not necessitate a different view.

What were the facts?

The Revenue appealed against the CIT(A)'s order allowing the assessee's claim for royalty payments. The Revenue argued that the expenditure was for an enduring benefit and that an appeal was pending before the High Court.

What were the issues?

Whether royalty payments for using a logo constitute revenue expenditure allowable under Section 37(1), even if an appeal on a similar issue is pending before the High Court.

Which sections of the Income-tax Act were involved?

Section 37(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI DUVVURU R.L. REDDY & SHRI S. JAYARAMAN

Hearing: 26.08.2019

Department by : Mr. R.Clement Ramesh- Kumar, Addl.CIT Assessee by : Mr.Samireddy Sai Sarat- Chandra, Adv. : 10.07.2019 सुनवाई क' तार"ख/Date of Hearing : 26.08.2019 घोषणा क' तार"ख/Dt. of Pronouncement आदेश / O R D E R PER SHRI DUVVURU R.L. REDDY, JUDICIAL MEMBER:

The Revenue filed this appeal against the order of the Commissioner of Income Tax (Appeals)-15, Chennai, in dated 31.12.2018 for the AY 2013-14. 2. The only grievance of the Revenue is that the Ld.CIT(A) directed the AO to allow the royalty payments claimed by the assessee. The Revenue has raised the following grounds: :- 2 -:

1. The order of the Ld. CIT(A) is contrary to the law and facts of the case.

2.

The Ld. CIT(A) erred in deleting the disallowance of royalty claim of Rs.72,21,334/- by relying on the decision of the Hon'ble Tribunal vide its order in dated 10-02-2017 for AY 2013-14 in the assessee's own case, decided in favour of the assessee.

2.1. The Ld. CIT(A) failed to appreciate that the Revenue has filed an appeal against the order of the Hon'ble Tribunal before the Hon'ble High Court Madras, which is still pending.

2.2. The Ld. CIT(A) erred in treating the expenditure on royalty as revenue in nature, though the assessee had got an enduring benefit on acquiring the intangible asset.

3. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the Ld. CIT(A) be set aside and that of the Assessing Officer restored.

3.

The Ld.Counsel for the assessee submitted that the same issue has been taken up by the Hon’ble ITAT in the assessee’s own case for the AY 2013-14 and decided this issue in favour of the assessee.

4.

Per Contra, the Ld.Counsel for the DR submitted that this issue has not reached its finality and the appeal is pending before the Hon’ble jurisdictional High Court. Therefore, the orders passed by the Ld.CIT(A) to be confirmed.

5.

We have heard both the sides and perused the materials available on record. We have also perused the orders of Tribunal in the assessee’s own case for the AY 2013-14 in dated 10.02.2017. The same is re-produced hereunder:

…….4. We have considered the rival submissions on either side and perused the material available on record. This Tribunal in the assessee’s own case in found that for using the logo which belongs to Shriram Ownership Trust, the assessee has to necessarily make payment. The payment was made on the basis of the turnover. In similar circumstances, this Tribunal found that the royalty payment has to be allowed as :- 3 -: revenue expenditure under Section 37(1) of the Income Tax Act, 1961 (in short ‘the Act’). In view of the above, this Tribunal is of the considered opinion that the CIT (Appeals) has rightly allowed the claim of the assessee. Mere pendency of the appeal before the High Court is not a reason for taking a different view. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly, the same is confirmed

6.

The Ld.DR could not controvert the findings of the Tribunal by filing

order of any higher court or modified or rectified or reversed. In view of the above, we are of the considered opinion that the Ld.CIT(A) has rightly allowed the claim of the assessee. Therefore, we are of the firm view that we do not find any reason to interfere with the orders of the lower authorities. Consequently, the grounds raised by the Revenue are dismissed.

7.

In the result, the appeal filed by the Revenue is dismissed.

Order pronounced on the 26th day of August, 2019, in Chennai. (एस. जयरामन) (धु,वु- आर.एल. रे.डी) (S. JAYARAMAN) (DUVVURU R.L. REDDY) लेखा सद"य /ACCOUNTANT MEMBER "या"यक सद"य/JUDICIAL MEMBER चे"नई/Chennai, 0दनांक/Dated: 26th August, 2019. TLN

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