ACIT CORPORATE CIRCLE 6(1), CHENNAI vs. SHRIRAM FORTUNE SOLUTIONS LTD., CHENNAI

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ITA 2050/CHNY/2018Status: DisposedITAT Chennai07 November 2018AY 2014-154 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 confirmed the CIT(A)'s order, allowing the royalty claim as revenue expenditure based on a previous decision in the assessee's own case. It also confirmed the deletion of the Section 14A disallowance, following the jurisdictional High Court's decision, as no exempt income was earned.

What were the facts?

The Revenue appealed the CIT(A)'s order which allowed the assessee's royalty claim as revenue expenditure and deleted the disallowance made under Section 14A. The assessee argued that the royalty payment was for using a logo and the disallowance under Section 14A was not warranted as no exempt income was earned.

What were the issues?

Whether royalty paid for using a logo is a revenue expenditure and whether disallowance under Section 14A is warranted when no exempt income is earned.

Which sections of the Income-tax Act were involved?

Section 37(1),Section 14A

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, ‘ C’ BENCH : CHENNAI

Before: SHRI ABRAHAM P GEORGE & SHRI GEORGE MATHAN

आदेश / O R D E R

PER GEORGE MATHAN , JUDICIAL MEMBER

1.

This is an appeal filed by the Revenue against the order of the Commissioner of Income-tax (Appeals)-15, Chennai in dated 28.03.2018 for the assessment year 2014-15.

2.

Shri Clement RameshKumar represented on behalf of the Revenue and Shri Ragha Rajeev Menon, represented on behalf of the Assessee.

3.

It was submitted by ld.D.R that Ground No.2 & 2.1 is against the action of Ld.CIT(A) in allowing the royalty claim of the assessee as a revenue expenditure. It was submitted by ld.A.R that the issue was squarely covered by the decision of the Co-ordinate Bench of this Tribunal in assessee's own case in ITA No.2893/Mds./2016, vide order dated 05.05.2017 wherein following the decision of Co-ordinate Bench of this Tribunalin ITA No.406/Mds./2016 dated 29.07.2016 has held as follows:-

“10. We have considered the rival submissions on either side and also perused the material available on record. Shriram Ownership Trust is a Trust by itself, therefore, its logo cannot be used by any other concern. The object of the Trust is not to do business. The assessee-company was established for the purpose of business. When the assessee- company used the logo belongs to Shriram Ownership Trust, this Tribunal is of the considered opinion that for the purpose of using the logo, the assessee has to necessarily make the payment. In the case before us, the payment was made on turnover basis, therefore, the same has to be allowed as revenue expenditure u/s 37(1) of the Act. This Tribunal do not find any reason to interfere with the order of the CIT(A) and accordingly, the same is confirmed.”

3.1 In respect of Grounds Nos.3 to 3.8, it was submitted by ld.D.R that the issue was against the action of the Ld.CIT(A) in deleting the disallowance made u/s.14A of the Act read with Rule 8D of the Income Tax Rules,1962. It was submitted by ld.A.R that the issue was squarely covered by the decision of jurisdictional High Court in the case of M/s.Redington India Ltd., Vs. ACIT reported in 392 ITR 633(Mad.). It was a submission that the assessee did not earn any exempt income or dividend income during the year out of the investments, and consequently no disallowance was called for.

4.

We have considered the rival submissions. In respect of Ground Nos.2 & 2.1, as it is noticed that this issue is squarely covered by the decision of Co-ordinate Bench of this Tribunal in assessee's own case for assessment year 2013-14 referred to supra, respectfully following the decision of Tribunal, the order of the CIT(Appeals) on this issue stands confirmed. In respect of Ground Nos.3 to 3.8, as it is noticed that the assessee has not received any exempt income, respectfully following the decision of Hon’ble Jurisdictional High Court in the case of M/s.Redington India referred to supra, finding of the Ld.CIT(A) on this issue stands confirmed.

5.

In the result, the appeal of the Revenue is dismissed.

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