DCIT 13(1)(2), MUMBAI V. PREMIER OPTICALS P. LTD, MUMBAI

ITA 5378/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0186 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 01-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Assessee Lawyers: SHRI
• Keywords: Depreciation; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 5378/MUM/2016 (ASSESSMENT YEAR: 2013-14) DCIT, CIRCLE - 13(1)(2) ROOM NO. 218, 2ND FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 VS. M/S. PREMIER OPTICALS P. LTD. 4, KIRTI MANOR, S.V. ROAD SANTACRUZ (W), MUMBAI 400054 PAN AAACP2280L APPELLANT RESPONDENT APPELLANT BY: SHRI V. VIDHYADHAR RESPONDENT BY: SHRI PANKAJ JAIN DATE OF HEARING: 19.02.2018 DATE OF PRONOUNCEMENT: 21.02.2018 O R D E R PER C.N. PRASAD, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A)-21, MUMBAI DATED 26.06.2016 FOR A.Y. 2013-14 . 2. THE ONLY GRIEVANCE IN THE APPEAL OF THE REVENUE IS THAT THE CIT(A) IS NOT JUSTIFIED IN DELETING THE DISALLOWANCE OF EXPEN DITURE CLAIMED ON ACCOUNT OF ROYALTY PAYMENT RELYING ON THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2008-09 AN D 2009-10. 3. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITS THAT THE ISSUE IN APPEAL IS DECIDED IN ASSESSEES OWN CASE B Y THE TRIBUNAL FOR ASSESSMENT YEARS 2008-09 TO 2011-12 HOLDING THAT RO YALTY PAYMENT MADE BY THE ASSESSEE IS REVENUE EXPENDITURE. THE LEARNED COUNSEL FOR THE ASSESSEE, REFERRING TO THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2011-12, WHICH IS PLACED AT PAGE 14 OF THE PAP ER BOOK, SUBMITTED THAT THE TRIBUNAL HELD THAT ROYALTY PAYMENT MADE BY THE ASSESSEE IS REVENUE ITA NO. 5378/MUM/2016 M/S. PREMIER OPTICALS P. LTD. 2 EXPENDITURE FOLLOWING THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEARS 2008- 09 AND 2009-10. 4. THE LEARNED D.R., ON THE OTHER HAND, VEHEMENTLY SU PPORTED THE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E ORDERS OF THE AUTHORITIES BELOW AND THE DECISION OF COORDINATE BE NCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2008-09 TO 2011-12 WHICH ARE PLACED IN THE PAPER BOOK. THE ONLY ISSUE IN THE APPEAL OF THE REV ENUE IS WHETHER THE ROYALTY PAYMENT MADE BY THE ASSESSEE IS CAPITAL EXP ENDITURE OR REVENUE EXPENDITURE. THE ASSESSEE MADE PAYMENT OF ROYALTY T O LAWRENCE AND MAYO INDIA PVT. LTD. AND THE SAID AMOUNT WAS CLAIMED AS REVENUE EXPENDITURE BY THE ASSESSEE CONTENDING THAT IT WAS DOING THE BU SINESS OF DISPENSING OPTICIANS AND ROYALTY AT 1% OF THE TURNOVER HAS TO BE PAID TO LAWRENCE AND MAYO INDIA PVT. LTD. FOR USING THEIR BRAND NAME AND THEREFORE IS AN ALLOWABLE EXPENDITURE. HOWEVER, THE AO DURING THE C URRENT ASSESSMENT YEAR AS WELL AS IN THE ASSESSMENT YEARS RIGHT FROM 2008-09 NEGATED THE CLAIM OF THE ASSESSEE AND TREATED SUCH EXPENDITURE AS CAPITAL EXPENDITURE AND ALLOWED DEPRECIATION. WHEN THE MATTER WAS CARRI ED TO THE CIT(A) AS WELL AS THE TRIBUNAL IN EARLIER YEARS THE COORDINAT E BENCH HELD THAT ROYALTY PAYMENT MADE BY THE ASSESSEE IS REVENUE EXPENDITURE . THEREFORE, RESPECTFULLY FOLLOWING THE SAID DECISION OF THE COO RDINATE BENCH WE UPHOLD THE ORDER OF THE CIT(A) IN HOLDING THAT THE PAYMENT MADE BY THE ASSESSEE TOWARDS ROYALTY TO SISTER CONCERN LAWRENCE AND MAYO INDIA PVT. LTD. IS REVENUE EXPENDITURE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEBRUARY, 2018. SD/ - SD/ - (A.L. SAINI) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 21 ST FEBRUARY, 2018 ITA NO. 5378/MUM/2016 M/S. PREMIER OPTICALS P. LTD. 3 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -21, MUMBAI 4. THE PR. CIT - 13, MUMBAI 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.