M/s. Herbalife International India Pvt Ltd., Bangalore V. ACIT, Bangalore

ITA 1406/BANG/2010

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0646 (ITAT-BANGALORE)
• Duration Of Justice: 7 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 09-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C SUNDER RAO CIT DR I
• Keywords: Royalty expenses; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P BOAZ , ACCOUNTANT MEMBER IT(TP)A NO. AND ASSESSMENT YEAR APPELLANT RESPONDENT 1406/BANG/2010 2006-07 M/S. HERBALIFE INTERNATIONAL INDIA PVT. LTD., #14, COMMISSARIAT ROAD, BENGALURU-560025. PAN : AAACH8025R THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 11(4), BENGALURU. 924/BANG/2012 2007-08 -DO- THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 11(4), BENGALURU. ASSESSEE BY : SHRI. CHAVALI NARAYAN, CA REVENUE BY : SHRI. C. SUNDER RAO, CIT - DR - I DATE OF HEARING : 1 1 . 0 9 .201 8 DATE OF PRONOUNCEMENT : 28 . 0 9 .201 8 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THESE APPEALS WERE DISPOSED OFF VIDE ORDER DATED 17.04.2017. LATER ON, MISCELLANEOUS APPLICATION WAS FILED CONTENDING THEREIN THAT GROUND NO. 4 IN IT(TP)A NO. 924/BANG/2012 AND GROUND NO. 9 IN IT(TP)A NO. 1406/BANG/2010 RELATING TO DISALLOWANCE OF 25% ROYALTY EXPENSES WERE NOT ADJUDICATED WHILE DISPOSING OFF THE APPEAL. FINDING FORCE IN THE CONTENTIONS OF THE ASSESSEE, THE TRIBUNAL REFIXED THESE APPEALS FOR HEARING ON GROUND NO. 9 IN IT(TP)A NO. 1406/BANG/2010 AND GROUND NO. 4 IN IT(TP)A NO. 924/BANG/2012. ACCORDINGLY, THESE APPEALS ARE LISTED FOR HEARING. IT(TP)A NOS. 1406/BANG/2010 AND 924/BANG/2012 PAGE 2 OF 3 2. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE IMPUGNED ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004-05 AND 2008-09. THE ORDER PASSED BY THE TRIBUNAL FOR THE ASSESSMENT YEAR 2004-05 WAS LATER ON APPROVED BY THE HONBLE HIGH COURT ALSO VIDE ORDER DATED 28.10.2014 IN ITA NO. 8/2009. COPY OF THE ORDERS OF THE TRIBUNAL AND HIGH COURT ARE PLACED ON RECORD. THE LEARNED DR DID NOT DISPUTE THESE FACTS. 3. HAVING CAREFULLY EXAMINED THE ORDERS OF THE TRIBUNAL AND THE HONBLE HIGH COURT IN THE IMPUGNED ISSUE, WE FIND THAT THE ISSUE HAS BEEN REPEATEDLY ADJUDICATED BY THE TRIBUNAL AND THE HIGH COURT AND IT WAS CATEGORICALLY HELD THAT THE ASSESSEE DID NOT GET ANY ENDURING BENEFIT IN THE SAID AGREEMENT WHICH IS THE CONDITION PRECEDENT FOR TREATING THE PAYMENT AS CAPITAL EXPENDITURE. THE RELEVANT OBSERVATION OF THE TRIBUNAL FOR ASSESSMENT YEAR 2008-09 IS EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: 8. IT IS PERTINENT TO NOTE THAT FOR THE YEAR UNDER CONSIDERATION, ROYALTY PAID BY THE ASSESSEE WAS UNDER THE SAME AGREEMENT AS IT WAS PAID FOR THE ASSESSMENT YEAR 2004-05. THE HONBLE HIGH COURT HAS DECIDED THIS ISSUE AFTER CONSIDERING THE RELEVANT CLAUSES OF THE AGREEMENT AND THEREFORE, THE ISSUE OF PAYMENT OF ROYALTY IS NOW COVERED BY THE DECISION OF THE HONBLE HIGH COURT IN THE ASSESSEES OWN CASE. RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT, WE ALLOW THE CLAIM OF THE ASSESSEE AND THE ADDITION MADE BY THE AO ON THIS ACCOUNT IS DELETED. 4. SINCE THE ISSUE IS SQUARELY COVERED BY THE AFORESAID ORDER OF THE TRIBUNAL IN THE AFORESAID CASE, WE DECIDE IT IN FAVOUR OF THE ASSESSEE AND DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALLOWED. IT(TP)A NOS. 1406/BANG/2010 AND 924/BANG/2012 PAGE 3 OF 3 PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER, 2018. SD/- SD/- BANGALORE. DATED: 28 TH SEPTEMBER, 2018. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. DR (ITAT) 4. CIT 5 . CIT(A) 6. GUARD FILE BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE. (JASON P BOAZ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER