DCIT, CHENNAI vs. M/S. SHRIRAM CHITS TAMILNADU PVT.LTD., CHENNAI

Ms. Kabila, the Ld. Departmental Representative submitted that the assessee claimed an amount of ₹74,68,980/- as royalty said to be paid to Shriram Ownership Trust. According, to the Ld. D.R., even though, this Tribunal found the payment royalty as a revenue expenditure, now the appeal filed by the Revenue is pending before the High Court. Therefore, to keep the matter live to the extent of ₹74,68,980/- was disallowed after allowing depreciation of ₹24,89,660/- at the rate of 25%.

On the contrary Shri ANR Jayaprathap, the Ld. counsel for the assessee submitted that the very same issue, royalty payment was allowed by this Tribunal in the assessee’s own case for the assessment year 2012-13 in by an order dated 29.07.2016.

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 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.

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