ACI, CORP CIR-6(1), CHENNAI V. SHRIRAM FINANCIAL PRODUCTS PVT LTD, CHENNAI

ITA 3215/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9868 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 26-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SUMATI VENKATRAMAN
• Assessee Lawyers: GAUTHAM VENKATNARAYANAN
• Keywords: Depreciation; Revenue expenditure; Set aside
• Section: 37(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI , !' , # $ BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBE R ' ./ ITA NO.3215/CHNY/2018 !% /ASSESSMENT YEAR: 2014-15 ASST. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-6(1), CHENNAI. VS. M/S. SHRIRAM FINANCIAL PRODUCTS SOLUTIONS CHENNAI PVT. LTD., 4, MOOKAMBIKA COMPLEX, LADY DESIKA ROADY, MYLAPORE, CHENNAI 600 004. [PAN : AA P CS 5666 L ] ( & /APPELLANT) ( '(& /RESPONDENT) & ) * / APPELLANT BY : MRS. SUMATI VENKATRAMAN, JCIT '(& ) * /RESPONDENT BY : SHRI GAUTHAM VENKATNARAYANAN, ADVOCATE + ! ) ,# /DATE OF HEARING : 01 .05.2019 -.% ) ,# / DATE OF PRONOUNCEMENT : 08.05.2019 / / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBER : THE REVENUE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNAI, IN ITA NO.406/201 6-17//CIT(A)-15 DATED 30.08.2018 FOR THE AY 2014-15. 2. M/S. SHRIRAM FINANCIAL PRODUCTS SOLUTIONS CHENNA I PVT. LTD., THE ASSESSEE, IS PROVIDING BUSINESS SUPPORT SERVICES, T RAINING AND DEVELOPMENT AND DISTRIBUTION OF FINANCIAL PRODUCTS. WHILE MAKI NG THE ASSESSMENT FOR ITA NO. 3215/CHNY/2018 :- 2 -: ASSESSMENT YEAR 2014-15, THE ASSESSEE CLAIMED RS. 1 ,39,84,930/- ROYALTY PAID TO SHRIRAM OWNERSHIP TRUST FOR USING THEIR COPY RIG HT LOGO. THE AO TREATED IT AS AN INTANGIBLE DEPRECIABLE ASSET AND ALLOWED DEPR ECIATION @25% AND DISALLOWED THE BALANCE SUM. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE CIT(A), THE ASSESSEE PLEA DED THAT IN BOTH ASSESSMENT YEARS 2012-13 & 2013-14, RESPECTIVELY, T HE HON'BLE ITAT, CHENNAI IN ITS DECISIONS IN ITA NOS. 733/MDS/2016 DATED 29. 07.2016 AND 2742/MDS/2016 DATED 09.03.2017, RESPECTIVELY, ALLOW ED THE PAYMENT OF ROYALTY FOR USING SHIRIRAM COMPANY LOGO AS REVENUE EXPENDITURE U/S. 37(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE LD. CIT(A) RESPECTFULLY FOLLOWING THE DECISIONS OF HON'BLE ITAT, CHENNAI DI RECTED THE AO TO ALLOW THE ROYALTY PAYMENT AS REVENUE EXPENDITURE AND WITHDRAW THE DEPRECIATION ALREADY GRANTED BY CAPITALIZING THE SAID AMOUNT. A GGRIEVED AGAINST THAT ORDER OF THE LD.CIT(A) , THE REVENUE FILED THIS APPEAL WI TH THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2. THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANC E OF ROYALTY PAYMENTS OF RS. 1,04,88,697/- RELYING ON THE DECISI ON OF HONBLE TRIBUNAL CHENNAI VIDE ITS ORDER ITA NOS.733/MDS/201 6 DATED 29-7- 2016 AND 2742/MDS/2016 DATED 9-3-2017 FOR AYS 2012- 13 & 2013-14 RESPECTIVELY IN THE ASSESSEES OWN CASE DECIDED IN FAVOUR OF THE ASSESSEE. 2.1. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE R EVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE HONBLE TRIBUNAL BE FORE THE HONBLE HIGH COURT MADRAS, WHICH IS STILL PENDING. 2.2. THE LD. CIT(A) ERRED IN TREATING THE EXPENDITU RE OF ROYALTY PAYMENT AS REVENUE IN NATURE, THOUGH THE ASSESSEE H AD GOT AN ENDURING BENEFIT ON ACQUIRING THE SAID INTANGIBLE A SSET. ITA NO. 3215/CHNY/2018 :- 3 -: 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LD.CIT( A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. THE LD. DR ARGUED AND PRESENTED THE CASE ON THE LINES OF THE GROUNDS OF THE APPEAL. PER CONTRA, THE LD. AUTHORISED REP RESENTATIVE OF ASSESSEE INVITED OUR ATTENTION TO THE RELEVANT PORTION OF T HE ORDER OF THE ITAT, CHENNAI IN ITA NO.733/MDS/2016 DATED 29.07.2016, WHICH IS E XTRACTED AS UNDER: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. TRU ST IS A TRUST BY ITSELF, THEREFORE, ITS LOGO CANNOT BE USED BY ANY O THER CONCERN. THE OBJECT OF THE TRUST IS NOT TO DO BUSINESS. THE ASSE SSEE-COMPANY WAS ESTABLISHED FOR THE PURPOSE OF BUSINESS. WHEN THE A SSESSEE- COMPANY USED THE LOGO BELONGS TO SHRITAM OWNERSHIP TRUST, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT FOR THE PURPOSE OF USING THE LOGO, THE ASSESSEE HAS TO NECESSARILY MAKE THE PAYM ENT. IN THE CASE BEFORE US, THE PAYMENT WAS MADE ON TURNOVER BASIS, THEREFORE, THE SAME HAS TO BE ALLOWED AS REVENUE EXPENDITURE U/S 3 7(1) OF THE ACT. THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. AND PLEADED THAT SINCE THE LD. CIT(A) FOLLOWED THE DECISIONS OF THIS TRIBUNAL, SUPRA, THE REVENUES APPEAL MAY BE DISM ISSED. 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. AS SUBMITTED SUPRA, THE ISSUE IN THE REVENUES APPE AL IS SQUARELY COVERED BY THE DECISIONS OF THE CO-ORDINATE BENCH OF THIS TRIB UNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2012-13 & 2013-14, RESPEC TIVELY. ON IDENTICAL FINDINGS, IT IS HELD THAT THE PAYMENT OF ROYALTY FO R USING SHRIRAM COMPANY LOGO HAS TO BE ALLOWED AS A REVENUE EXPENDITURE U/S . 37(1) OF THE ACT. SINCE THE LD. CIT(A) HAS FOLLOWED THE JUDICIAL DISCIPLI NE IN FOLLOWING THE DECISIONS OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL, REFERRED SU PRA, WE FIND NO REASON TO ITA NO. 3215/CHNY/2018 :- 4 -: INTERFERE WITH THE ORDER OF LD. CIT(A) ON THIS ISSU E. CONSEQUENTLY, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH MAY, 2019 IN CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( . ) (S. JAYARAMAN) # /ACCOUNTANT MEMBER /CHENNAI, 0' /DATED: 08 TH MAY, 2019 . EDN, SR. P.S / ) ',12 32%, /COPY TO: 1. & /APPELLANT 2. '(& /RESPONDENT 3. + 4, ( )/CIT(A) 4. + 4, /CIT 5. 2!56 ', /DR 6. 6 7 /GF