D.C.I.T.- 9(2), MUMBAI V. PREMIER OPTICALS PVT. LTD., MUMBAI

ITA 4865/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78690 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-12-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 26-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PANKAJ JAIN
• Keywords: Depreciation; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 4865/MUM/2012 ASSESSMENT YEAR: 2009-10 DCIT -9(2) R. NO. 218, 2 ND FLOOR, AAYAKAR BHAVAN MK ROAD MUMBAI-400 020 VS. PREMIER OPTICALS PVT. LTD. 1, KIRTI MANOR, S.V. ROAD SANTACRUZ (W), MUMBAI-54 (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :AAACP 2280 L ASSESSEE BY : MR. PANKAJ JAIN REVENUE BY : SHRI RAJESH KUMAR DATE OF HEARING : 10.04.2014 DATE OF PRONOUNCEMENT : 16.04.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A)-20, MUMBAI DATED 25.05.2012 FOR THE ASSES SMENT YEAR 2009-10. 2. IN GROUND NO. 1, THE REVENUE HAS AGITATED THE AC TION OF THE LD.CIT(A) IN DELETING THE DISALLOWANCE/ADDITION OF RS.4,95,980/- PERTAINING TO THE EXPENDITURE CLAIMED BY THE ASSESSEE ON ACCOUNT OF REPAIRS AND M AINTENANCE BY TREATING THE SAME AS REVENUE EXPENDITURE AS AGAINST THE AO TREAT ING THE SAME AS CAPITAL EXPENDITURE. 2.1 AT THE OUTSET, IT IS NOTED THAT THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO. 394/MUM/2005 FOR THE ASSESSMENT YEAR 2001-02 HA S HELD THAT SIMILAR EXPENSES INCURRED BY THE ASSESSEE SHOULD BE ALLOWED AS REVEN UE EXPENDITURE. IT IS ALSO NOTED THAT THE LD.CIT(A) IN THE ASSESSEES CASE FOR THE A SSESSMENT YEARS 2005-06 AND 2008-09 HAS TREATED THE EXPENSES INCURRED ON REPAIR S TO PREMISES, REPAIRS TO OTHER ASSETS AND REPAIRS TO MACHINERY ARE REVENUE IN NATU RE AND DELETED THE IMPUGNED DISALLOWANCES MADE BY THE AO ON THIS COUNT. THE REV ENUE HAS NOT CONTRADICTED THE ITA NO. 4865/MUM/2012 PREMIER OPTICALS PVT. LTD. ASSESSMENT YEAR: 2009-10 2 FACT THAT AGAINST THE SAID DECISIONS OF THE LD.CIT( A) NO FURTHER APPEAL HAS BEEN PREFERRED BEFORE THE TRIBUNAL. IN VIEW OF THE FACT THAT THE LD.CIT(A) HAS TAKEN COGNIZANCE OF HIS OWN DECISIONS AND THE DECISION OF THE ITAT IN THE ASSESSEES OWN CASE FOR DELETING THE IMPUGNED DISALLOWANCE/ADDITIO N DURING THE YEAR UNDER CONSIDERATION, WE DO ANY INFIRMITY IN THE DECISION OF THE LD.CIT(A) IN DELETING THE IMPUGNED DISALLOWANCE/ADDITION. RESULTANTLY, GROUND NO. 1 DISMISSED . 3. IN GROUND NO. 2, THE REVENUE HAS AGITATED THE AC TION OF THE LD.CIT(A) IN DELETING THE DISALLOWANCE OF RS.43,92,954/- MADE BY THE AO PERTAINING TO THE EXPENDITURE CLAIMED BY THE ASSESSEE ON ACCOUNT OF R OYALTY PAYMENT. 3.1 BRIEFLY STATED, DURING THE YEAR UNDER CONSIDERA TION, THE ASSESSEE HAD DEBITED IN ITS PROFIT & LOSS ACCOUNT, A SUM OF RS.43,92,954 /- TOWARDS ROYALTY TO M/S LAWRENCE & MAYO PVT. LTD. ACCORDING TO THE ASSESSEE , THAT THE ROYALTY @1% ON OPTICAL TURNOVER ACHIEVED BY THEM FOR PROVIDING GUI DANCE, KNOWHOW AND ALSO FOR DISPLAY OF NAME BOARD & USE OF THE NAME LAWRENCE & MAYO WAS PAID THROUGH AGREEMENT. THIS EXPENDITURE MERELY ALLOWED THE ASSE SSEE TO USE THE NAME WHICH FACILITATED THE ASSESSEES BUSINESS WITH A VIEW TO PRODUCE PROFITS AND THEREFORE THE SAME WAS IN REVENUE NATURE. HOWEVER, THE AO WAS OF THE VIEW THAT THE ASSESSEE USED THE BRAND NAME WHICH IS THE EXCLUSIVE RIGHT AN D, THEREFORE, THE PROVISIONS OF SECTION 32(1)(II) OF THE ACT PERTAINING TO ACQUIRIN G OF TRADE MARK IS TO BE APPLIED AND DEPRECIATION @ 25% IS ONLY TO BE ALLOWED ON RS.43,9 2,954/- THUS LEADING TO AN ADDITION OF RS.32,94,715/-. ON APPEAL, THE LD.CIT(A ) HAD OBSERVED THAT THE ISSUE WAS RECURRING IN NATURE AND BY FOLLOWING HIS OWN OR DERS FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09, HELD THAT THE EXPENDITURE WAS REVENUE IN NATURE. 3.2. HAVING HEARD BOTH THE SIDES AND PERUSED THE MA TERIAL ON RECORD, IT IS PERTINENT TO MENTION THAT THE TRIBUNAL VIDE ITS ORD ER DATED 07.08.2013 IN ITA NO. 9105/MUM/2010, ON THE SAME ISSUE, BY DISMISSING THE APPEAL OF THE REVENUE HAS CONFIRMED THE ORDER OF THE LD.CIT(A) FOR THE ASSESS MENT YEAR 2007-08 AND THEREBY ALLOWED THE CLAIM OF THE ASSESSEE. FOR THE SAID ORD ER, THE TRIBUNAL HAS RELIED ON THE EARLIER ORDER OF THE TRIBUNAL DATED 20.03.2012 IN T HE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09 IN ITA NO. 4055/MUM/2011 WH EREIN IT HAS HELD THAT THE EXPENDITURE IS ALLOWABLE AS A REVENUE EXPENDITURE. CONSIDERING THE FACT THAT THE ITA NO. 4865/MUM/2012 PREMIER OPTICALS PVT. LTD. ASSESSMENT YEAR: 2009-10 3 ISSUE IS RECURRING IN NATURE AND IT HAS BEEN CONSIS TENTLY HELD THAT THE PAYMENT OF ROYALTY @ 1% OF THE ANNUAL TURNOVER BY THE ASSESSEE TO LAWRENCE & MAYO IS ALLOWABLE AS REVENUE EXPENDITURE, WE ARE NOT INCLIN ED TO INTERFERE WITH THE DECISION OF THE LD.CIT(A) AS THE SAME HAS BEEN RENDERED BY F OLLOWING HIS OWN ORDERS FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09, WHICH HAVE BE EN UPHELD BY THE TRIBUNAL. THUS, THE DECISION OF THE LD.CIT(A) ON THIS COUNT I S UPHELD. GROUND NO. 2 IS DISMISSED . 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF APRIL, 2014. SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 16.04.2014. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR A BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.