DCIT, CHENNAI V. Indian Additives Ltd., CHENNAI

ITA 1483/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73599 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 01-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGIR I IRS
• Assessee Lawyers: M VISWANATHAN
• Keywords: Revenue expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO. 1483(MDS)/2013 ASSESSMENT YEAR : 2008-09 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(3), CHENNAI - 600 034. V. M/S INDIAN ADDITIVES LTD., EXPRESS HIGH WAY, MANALI, CHENNAI - 600 068. PAN : AAACI 1445 G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.N. BE TGIRI, IRS, JCIT RESPONDENT BY : SHRI M. VISWANAT HAN, CA DATE OF HEARING : 6 TH JANUARY, 2014 DATE OF PRONOUNCEMENT : 6 TH JANUARY, 2014 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS APPEAL FILED BY THE REVENUE RELATES TO ASSES SMENT YEAR 2008-09 AND DIRECTED AGAINST THE ORDER OF THE COMMI SSIONER OF INCOME TAX (APPEALS)-III AT CHENNAI, DATED 4.3.2013 . THE APPEAL ARISES OUT OF THE ASSESSMENT COMPLETED UNDER SECTIO N 143(3) OF THE INCOME-TAX ACT, 1961. 2 I.T.A. NO. 1483/MDS/13 2. THE ONLY ISSUE RAISED BY THE REVENUE IN THE PRES ENT APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN HOLDING THAT ROYALTY PAYMENTS MADE BY THE ASSESSEE TO M/S CHEVRON ORONITE COMPANY LLC USA TO THE EXTENT OF ` 4.66 CRORES, ARE REVENUE IN NATURE. 3. THIS ISSUE REGARDING THE NATURE OF ROYALTY PAYME NTS MADE BY THE ASSESSEE WAS CONSIDERED BY DIFFERENT BENCHES OF THE TRIBUNAL FOR THE EARLIER ASSESSMENT YEARS. 4. ITAT, CHENNAI A-BENCH, IN ASSESSEE'S OWN CASE F OR THE ASSESSMENT YEARS 1999-2000, 2000-01, 2001-02 AND 20 02-03 AND OTHER APPEALS IN I.T.A. NO. 2138/MDS/2008 AND OTHER S, HAS CONSIDERED THIS ISSUE THROUGH ORDER DATED 13 TH NOVEMBER, 2009. 5. AGAIN, ITAT, CHENNAI A-BENCH IN ASSESSEE'S OWN CASE, HAS DECIDED THIS ISSUE FOR THE ASSESSMENT YEARS 2003-04 , 2005-06 AND 2006-07, THROUGH THE ORDER DATED 6 TH SEPTEMBER, 2012 PASSED IN I.T.A. NOS.1437, 1438 AND 1439/MDS/2012. 6. AGAIN, ITAT, CHENNAI A-BENCH HAS CONSIDERED THI S ISSUE IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2004-05, TH ROUGH ORDER 3 I.T.A. NO. 1483/MDS/13 DATED 17 TH JUNE, 2011 PASSED IN I.T.A. NOS.703/MDS/2009 AND 952/MDS/2009. 7. IN ALL THE ABOVE ORDERS, THE TRIBUNAL HAS CONSID ERED THE ISSUE IN A DETAILED MANNER AND HAS COME TO A CONSISTENT F INDING THAT WHEN THE LUMP SUM ROYALTY WAS SEPARATELY AGREED AND PAID , THEN THE RUNNING ROYALTY WOULD ONLY BE A REVENUE EXPENDITURE PAID BY THE ASSESSEE FOR USE OF LICENCE, TRADEMARK AND TECHNICA L INFORMATION IN A PARTICULAR PERIOD OF TIME. THE TRIBUNAL HELD THA T THE PAYMENTS WERE IN THE NATURE OF REVENUE EXPENSES ELIGIBLE FOR DEDUCTION IN COMPUTING THE TAXABLE INCOME OF THE ASSESSEE. THE TRIBUNAL HAS CONSISTENTLY HELD THIS ISSUE IN FAVOUR OF ASSESSEE. 8. IN THE PRESENT APPEAL ALSO, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FOLLOWED THE ABOVE ORDERS OF THE TRIB UNAL AND HAS DECIDED THAT THE CLAIM OF THE ASSESSEE WAS PROPER T HAT THE ROYALTY PAYMENTS MUST BE TREATED AS REVENUE EXPENDITURE. T HE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IS JUST AND PROPER IN LAW. THEREFORE, IN THE FACTS AND CIRCUMS TANCES OF THE CASE, THIS APPEAL FILED BY THE REVENUE IS DISMISSED . 9. IN RESULT, THIS APPEAL FILED BY THE REVENUE IS D ISMISSED. 4 I.T.A. NO. 1483/MDS/13 ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON MONDAY, THE 6 TH OF JANUARY, 2014 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR. O.K. NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 6 TH JANUARY, 2014. KRI. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT, CHENN AI-I, CHENNAI 4. CIT(A)-III , CHENNAI 5. DR 6. GF.