DCIT, NEW DELHI vs. M/S. PPAP AUTOMOTIVES LTD., NEW DELHI

Briefly, the facts of the case are that A.O. disallowed the above amount being 25% of the expenditure incurred towards ‘Royalty’ by holding it as capital expenditure. The A.O. stated that assessee had made payment of Rs.1.81 crores as royalty to Tokai Kogyo Co. Ltd. This was on account of Training and Education and Technical knowhow. 25% of the expenditure was disallowed by the A.O. in view of the decision of Hon’ble Supreme Court in the case of Southern Switchgear Co. Ltd., vs. CIT 232 ITR 259. The assessee submitted before Ld. CIT(A) in A.Ys. 2005-2006, 2006-2007 and 2008-2009 that the similar addition made have been deleted by the Tribunal. In A.Ys. 2009- 2010, 2010-2011 and 2011-2012, the Ld. CIT(A) has followed the decision of the Tribunal and deleted the entire addition. The Ld. CIT(A) following these orders, deleted the addition.

Learned Counsel for the Assessee, at the outset, submitted that the Revenue preferred appeal before the Tribunal on similar grounds for A.Y. 2011-2012 in ITA.No.5713/Del./2016 which have been dismissed vide order

In view of the above, we are of the view that the issue is covered in favour of the assessee by the Order of the Tribunal for earlier years referred to above as well as recently the Tribunal dismissed the appeal of the Revenue for the A.Y. 2011- 2012 vide order dated 26.10.2017 (supra). The Departmental Appeal fails and is dismissed.

In the result, appeal of the Revenue is dismissed.