A.P. Organics (P) Ltd., Ludhiana V. Addl. CIT, Ludhiana

ITA 63/CHANDI/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0042 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 03-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Capital asset; Depreciation; Royalty expenses; Revenue expenditure; Capital expenditure

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.63/CHD/2016 ASSESSMENT YEAR: 2009-10 A.P ORGANICS (P) LTD. VS. THE ADDL. CIT, SCO-14, SECOND FLOOR, RANGE-VII, LUDHIANA PEARL PALACE, LUDHIANA PAN NO. AACCA4673L (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SUDHIR SEHGAL RESPONDENT BY : SH. MANJIT SINGH DATE OF HEARING : 11/04/2016 DATE OF PRONOUNCEMENT : 03/05/2016 ORDER PER ANNAPURNA GUPTA, A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)- 3, LUDHIANA DT. 30/11/2015. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APP EAL : 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX (APP EALS)-3, LUDHIANA HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN D ISALLOWING THE ROYALTY TO THE TUNE OF RS. 2,50,000/-CLAIMED BY THE ASSESSEE AS REVENUE EXPENDITURE AS PER PARA 4.4 OF HIS ORDER. 2. THAT THE WORTHY CIT(A)-3 HAS ERRED IN NOT CONSI DERING THAT THE ROYALTY WAS PAID TO RECELA HEALTH FOODS LTD. FOR USING THE BRAND NAME O F RICELA AND SAME IS OF REVENUE NATURE AND ALLOWABLE EXPENDITURE AND ON WHI CH, THE COMPANY ALSO DEDUCTED TDS ON ROYALTY PAID. 3. THAT THE ADDITION HAS BEEN MADE AGAINST THE FACT S AND CIRCUMSTANCES OF THE CASE AND SUBMISSION FILED DURING THE COURSE OF HEAR ING HAS NOT BEEN CONSIDERED PROPERLY. 2. THE ONLY ISSUE IN THE PRESENT APPEAL IS THE DISA LLOWANCE OF ROYALTY EXPENSES TO THE TUNE OF RS. 2,50,000/- CLAIMED BY T HE ASSESSEE AS REVENUE EXPENDITURE BY HOLDING THE SAME TO BE CAPITAL IN NA TURE. 2 3. BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURIN G THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WI TH RICELA HEALTH FOODS LTD. FOR USING THE BRAND NAME OF RICELA AND PAID ROYAL TY AMOUNTING TO RS. 2,50,000/-. THE SAME WAS TREATED AS REVENUE EXPENDI TURE AND CLAIMED AGAINST THE INCOME EARNED BY THE ASSESSEE. THE AO HELD THAT THE SAME CONSTITUTED CAPITAL EXPENDITURE AND DISALLOWED THE SAME WHILE A LLOWING DEPRECIATION ON IT. 4. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT(A) WHO UPHELD THE ORDER OF THE AO TREATING THE IMPUGNED EXPENSES AS C APITAL BY HOLDING THAT THE ANNUAL LEASE AMOUNT WAS PAID IN LUMP SUM AND WAS NO T BASED ON SALES AND FURTHER THAT THE ASSESSEE HAD BEEN GIVEN EXCLUSIVE RIGHT OF USE OF THE TRADE MARK. LD. CIT HELD AT PARA 4.4 OF ITS ORDER AS FOLL OWS: 4.4 I HAVE CAREFULLY CONSIDERED THE APPELLANTS SU BMISSIONS AND FACTS OF THE CASE ON RECORD. THE TERMS AND CONDITIONS OF THE ROYALTY AGREEMENTS ARE AS UNDER:- 1. THAT THIS AGREEMENT SHALL BE EFFECTIVE FROM 1 ST APRIL 2008 AND SHALL REMAIN IN FORCE FOR THE PERIOD 1 ST APRIL 2008 TO 31 ST MARCH 2013. HOWEVER THE PARTIES ARE FREE TO RENEW THE SAME BY MUTUAL CONSENT VERBALLY O R IN WRITING AFTER THE PERIOD OF THIS AGREEMENT. 2. THAT THE ANNUAL LEASE AMOUNT SHALL BE RS. 2,50,0 00/-(RUPEES TWO LACS THOUSAND ONLY) PER ANNUM PAYABLE IN QUARTERLY INSTA LLMENTS. 3. THAT THE PARTY OF 1 ST PART, THE LESSER HAS AUTHORIZED TO ME THAT TRADE M ARK OVER TODAY 1 ST APRIL 2008 FOR USE OF THE LEASED TRADE MARK TO THE PARTY OF THE 2 ND PART PAYEE LESSEE. 4. THAT THE LESSEE SHALL NOT MORTGAGE, SUBLET ASSIG N OR TRANSFER IN ANY OTHER WAY THE LEASED TRADE MARK OR ANY OTHER RIGHTS OF TH E LESSER. 5. THAT THE LESSER SHALL NOT INTERFERE IN DAY TO DA Y BUSINESS OF THE LESSEE. 6. THAT ON THE DATE OF TERMINATION OF THE LEASE DEE D AT ANY OTHER EARLIER DATE IF THE AGREEMENT IS CANCELLED, THE LESSEE WILL BOUND TO NOT USE THE TRADEMARK AS PER THE SATISFACTION AND SHALL EXECUTE A REGISTERED SURRENDER DEED. 7. THAT IN CASE OF ANY CONTROVERSY ARISING OUT OF T HIS DEED OR RELATING THERETO, THE SAME BE SETTLED BY THE ARBITRATORS UNDER ARBITR ATIONS ACT. THE APPELLANT HAS ENTERED INTO A LEASE DEED WITH M /S A.P. SOLVEX LTD., A PERIOD OF 5 YEARS WHICH IS RENEWABLE BY MUTUAL CONS ENT VERBALLY OR IN WRITING AFTER THE PERIOD OF THE AGREEMENT. THE ANNUAL LEASE AMOUN T PAYABLE FOR USE OF TRADEMARK BY THE APPELLANT IS LUMP SUM AND NOT BASE D ON SALES. THE LESSER HAS GIVEN EXCLUSIVE RIGHT OF USE TO THE APPELLANT AS TH E LESSER SHALL NOT INTERFERE IN THE DAY TO DAY BUSINESS OF THE APPELLANT. IN THE CASE L AWS RELIED UPON BY THE APPELLANT, THE LUMP SUM PAYMENT FOR THE USE OF TRAD EMARK WAS NOT MADE, RATHER, IT WAS BASED ON NET SALES. THEREFORE, THESE CASE LA WS DO NOT SUPPORT THE CASE OF APPELLANT. THEREFORE, IN VIEW OF THE TERMS OF AGREE MENT AND FACTS OF THE CASE AS RECORDED BY THE ASSESSING OFFICER THE APPEAL OF THE APPELLANT IS REJECTED. 3 5. AGGRIEVED BY THE SAME THE ASSESSEE FILED THE PRE SENT APPEAL BEFORE US. 6. BEFORE US LD. COUNSEL FOR THE ASSESSEE REITERATE D THE CONTENTION MADE BEFORE THE LOWER AUTHORITIES AND STATED THAT THE IM PUGNED PAYMENT FOR THE USE OF TRADEMARK WAS A REVENUE EXPENDITURE. LD. AR FURT HER CONTENDED THAT THE ASSESSEE HAD BEEN GIVEN USE OF THE TRADEMARK FOR A LIMITED PERIOD OF FIVE YEARS AND THAT NO ASSET HAD COME INTO EXISTENCE NOR ANY B ENEFIT OF ENDURING NATURE HAD BEEN ACQUIRED BY THE ASSESSEE. LD. AR RELIED UP ON THE FOLLOWING CASE LAWS IN SUPPORT OF ITS CONTENTION: A) CIT VS. GUJRAT CARBON LTD. 254 ITR 0294 (GUJARAT HC ) B) CIT VS. KUMAX INDUSTRIES LTD. 5 DTR338 (DEL HC) C) CIT VS. KANPUR CIGERETTES P LTD. 287 ITR 485 D) CIT VS. G4S SECURITIES INDIA P. LTD. 338 ITR 46 E) CIT VS. ESSEL PROPPACK LTD. 325 ITR 185 (BOMBAY HC) F) ALEMBIC CHEMICAL WORKS LTD. 177 ITR 377 (SC) G) CIT VS. IAEC PUMPS LTD. 232 ITR 316 (SC) 7. LD. DR ON THE OTHER HAND RELIED UPON THE ORDER O F THE LD. CIT(A) AND STATED THAT AS PER THE PROVISIONS OF SECTION 32(1)( II) PAYMENT FOR TRADE MARK HAS TO BE TREATED AS CAPITAL EXPENDITURE. LD. DR FURTHE R STATED THAT SINCE THE PAYMENT HAD BEEN MADE IN LUMP SUM AND THE ASSESSEE HAD EXCLUSIVE RIGHT FOR THE USE OF TRADE MARK, THE EXPENDITURE HAD BEEN COR RECTLY TREATED AS BEING CAPITAL IN NATURE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD PLACE BEFORE US. 9. THE ONLY ISSUE IN THE PRESENT APPEAL IS RELATIN G TO THE CHARACTERIZATION OF THE IMPUGNED EXPENSES AS BEING CAPITAL OR REVENUE IN NATURE. THE PARAMETER FOR DETERMINING THE NATURE OF AN EXPE NDITURE WHETHER CAPITAL OR REVENUE AS LAID DOWN BY THE HONBLE SUPREME COURT I N THE CASE OF EMPIRE JUTE CO. LTD. 124 ITR 1 (SC) IS THAT WHERE THE ADVANTAGE OF THE EXPENDITURE IS IN THE 4 CAPITAL FIELD IT WOULD BE TREATED AS CAPITAL EXPEND ITURE ON THE OTHER HAND IF THE ADVANTAGE CONSIDERED MERELY IN FACILITATING THE ASS ESSEES TRADING OPERATION OR ENABLING THE MANAGEMENT AND CONDUCT OF THE ASSESSEE S BUSINESS TO BE CARRIED ON MORE EFFICIENTLY OR MORE PROFITABLY, WHI LE LEAVING THE FIXED CAPITAL UNTOUCHED THE EXPENDITURE WOULD BE ON REVENUE ACCOU NT. THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS . CARBURETTORS LTD. 221 ITR 680 HAS HELD THAT FOR THE PURPOSE OF DETERMINING TH E TRUE NATURE OF THE EXPENDITURE WHAT IS RELEVANT IS THE PURPOSE OF THE OUT LAY AND ITS INDICATED OBJECT AND FACT, CONSIDERED IN THE COMMON SENSE WAY HAVING REGARD TO THE BUSINESS REALITIES. THUS IT IS THE INTENTION / PURP OSE OF WHICH THE EXPENDITURE HAS BEEN MADE WHICH IS TO BE CONSIDERED FOR DETERMINING WHETHER IT IS ON CAPITAL OR REVENUE ACCOUNT. 10. IN THE PRESENT CASE THE AGREEMENT BY VIRTUE OF WHICH THE ASSESSEE AGREED TO PAY THE IMPUGNED SUM STATED AS UNDER: 1. THAT THIS AGREEMENT SHALL BE EFFECTIVE FROM 1 ST APRIL 2008 AND SHALL REMAIN IN FORCE FOR THE PERIOD 1 ST APRIL 2008 TO 31 ST MARCH 2013. HOWEVER THE PARTIES ARE FREE TO RENEW THE SAME BY MUTUAL CONSENT VERBALLY O R IN WRITING AFTER THE PERIOD OF THIS AGREEMENT. 2. THAT THE ANNUAL LEASE AMOUNT SHALL BE RS. 2,50,0 00/-(RUPEES TWO LACS THOUSAND ONLY) PER ANNUM PAYABLE IN QUARTERLY INSTA LLMENTS. 3. THAT THE PARTY OF 1 ST PART, THE LESSER HAS AUTHORIZED TO ME THAT TRADE M ARK OVER TODAY 1 ST APRIL 2008 FOR USE OF THE LEASED TRADE MARK TO THE PARTY OF THE 2 ND PART PAYEE LESSEE. 4. THAT THE LESSEE SHALL NOT MORTGAGE, SUBLET ASSIG N OR TRANSFER IN ANY OTHER WAY THE LEASED TRADE MARK OR ANY OTHER RIGHTS OF TH E LESSER. 5. THAT THE LESSER SHALL NOT INTERFERE IN DAY TO DA Y BUSINESS OF THE LESSEE. 6. THAT ON THE DATE OF TERMINATION OF THE LEASE DEE D AT ANY OTHER EARLIER DATE IF THE AGREEMENT IS CANCELLED, THE LESSEE WILL BOUND TO NOT USE THE TRADEMARK AS PER THE SATISFACTION AND SHALL EXECUTE A REGISTERED SURRENDER DEED. 7. THAT IN CASE OF ANY CONTROVERSY ARISING OUT OF T HIS DEED OR RELATING THERETO, THE SAME BE SETTLED BY THE ARBITRATORS UNDER ARBITR ATIONS ACT. A BARE PERUSAL OF THE ABOVE WOULD REVEAL THAT THE A GREEMENT WAS ENTERED INTO BY THE ASSESSEE FOR ACQUIRING THE RIGHTS TO USE THE TRADE MARK. THE ASSESSEE HAS NOT BEEN GIVEN ANY RIGHT TO MORTGAGE, SUBLET ASSIGN OR TRANSFER THE LEASED TRADE 5 MARK OR ANY OTHER RIGHT OF THE ASSESSEE ACQUIRED UN DER THE AGREEMENT. IT IS EVIDENT FROM THE ABOVE THAT VIDE THE AGREEMENT ENTE RED INTO, THE ASSESSEE HAS NOT BECOME THE OWNER OF ANY TRADEMARK. INFACT, THE ASSESSEE HAS ACQUIRED ONLY THE RIGHT OF USE OF THE TRADEMARK MORE PARTICULARLY FOR A FIXED PERIOD OF FIVE YEARS ONLY, AFTER THE END OF WHICH THE ASSESSEE WOULD NOT HAVE ANY FURTHER RIGHT TO USE THE TRADEMARK. CLEARLY THEREFORE WHAT THE ASSESSEE HAS PAID FOR IS ONLY FOR THE USER OF TRADEMARK, NO CAPITAL ASSET HAS BEEN ACQUIRED BY THE ASSESSEE NOR HAS ANY ASSET CAME INTO EXISTENCE. THE OUTLAY OF RS. 2,50,000/- MADE B Y THE ASSESSEE CANNOT THEREFORE SET TO BE ON CAPITAL ACCOUNT. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS IND IAN OXYGEN LTD (1996) 218 ITR 337(SC) HAD HELD THAT BY VIRTUE OF THE COLLABOR ATION AGREEMENT THE ASSESSEE HAD NOT BOUGHT ANY INFORMATION, PROCESS OR INVENTIO N NOR WAS THE ASSESSEE ENTITLED TO USE THEM AFTER THE TERMINATION OF AGREE MENT. THE EXPENDITURE COULD NOT BE SAID TO HAVE BROUGHT INTO EXISTENCE ANY ASS ET OR ADVANTAGE OF ENDURING NATURE AND THE EXPENDITURE WAS NOT CAPITAL IN NATUR E. THE HONBLE SUPREME COURT HELD AT PARA G &H AS FOLL OWS: G. AFTER EXAMINING THE VARIOUS CLAUSES IN TH AGREE MENT BETWEEN THE ASSESSE AND THE BRITISH OXYGEN CO. LTD. THE HIGH COURT FOUN D AS FOLLOWS ( AT PAGE 1029) H. THE ENGLISH COMPANY DID NOT SELL ANY INFORMATI ON, PROCESS AND INVENTIONS TO THE INDIAN COMPANY. UNDER CLAUSE 22 OF THE AGREE MENT, THE INDIAN COMPANY IS NOT ENTITLED TO USE THEM AFTER THE TERMINATION O F THIS AGREEMENT. THE INDIAN COMPANY IS PROHIBITED FROM DISCLOSING THESE INFORMA TION, PROCESSES AND INVENTIONS DURING THE CURRENCY AND ALSO AFTER THE D ETERMINATION OF THIS AGREEMENT IN VIEW OF ITS CLAUSE 11. THOUGH THIS AGREEMENT IS FOR A PERIOD OF TEN YEARS, IT CAN BE TERMINATED EARLIER AS PROVIDED IN CLAUSE 23. THE REFORE, IT CANNOT BE SAID THAT THE INDIAN COMPANY HAS INCURRED THE EXPENDITURE FOR THE PURPOSE OF BRINGING INTO EXISTENCE ANY ASSET OR ADVANTAGE OF AN ENDURING NAT URE. IT MUST ALSO BE HELD THAT THIS EXPENDITURE IS NOT A CAPITAL BUT A REVENUE EXP ENDITURE, FOR IT WAS INCURRED BY THE INDIAN COMPANY FOR RUNNING ITS BUSINESS OR WOR KING IT WITH A VIEW TO PRODUCE PROFITS. WE ARE OF THE OPINION THAT THE SAID UNDERSTANDING O F THE AGREEMENT IS CORRECT. ONCE IT IS SO, THE AMOUNT PAID BY THE ASSESSEE TO T HE BRITISH COMPANY CANNOT BE TREATED AS CAPITAL EXPENDITURE. IT IS NOTHING BUT R EVENUE EXPENDITURE AND HAS BEEN RIGHTLY HELD SO BY THE HIGH COURT. THE APPEALS ACCORDINGLY FAIL AND ARE DISMISSED. NO COSTS. 6 IN THE CASE OF CIT VS. I.A.E.C.(PUMPS) LTD. (1998)2 32 ITR 316 THE HONBLE SUPREME COURT HAD HELD THAT WHERE THE AGREEMENT WAS ENTERED INTO FOR GRANT OF LICENSE TO USE PATENT DESIGN FOR A PERIOD OF TEN YEARS, WHA T WAS OBTAINED BY THE ASSESSEE WAS ONLY A LICENSE IN PURSUANCE TO WHICH L ICENSE FEE HAD BEEN PAID AND NO ASSET HAD BEEN ACQUIRED. THE EXPENDITURE WAS THEREFORE HELD TO BE ON REVENUE ACCOUNT. THE HONBLE SUPREME COURT HELD AS FOLLOWS : BROADLY THREE QUESTIONS WERE REFERRED TO THE HIGH COURT. IN ALL OF THEM, THE QUESTION INVOLVED IS WHETHER THE AMOUNT PAID BY T HE RESPONDENT-ASSESSEE TO THE FOREIGN COLLABORATOR FOR TECHNICAL KNOW-HOW IS A CAPITAL EXPENDITURE OR A REVENUE EXPENDITURE. THE HIGH COURT REFERRED TO TH E DECISION OF THIS COURT IN CIT VS. CIBA OF INDIA LTD.(1968) 69 ITR 692(SC): TC 16R .1185 AND ALSO THE AGREEMENT IN QUESTION. IT HELD THAT ULTIMATELY, THE QUESTION IS TO BE DECIDED ON THE BASIS OF THE RELEVANT AGREEMENT. ACCORDING TO THE HIGH COURT, TH E ONLY GENERAL PRINCIPLE THAT CAN BE DERIVED FROM THE DECISIONS, IS WHETHER UNDER THE TERMS OF THE AGREEMENT, THE ASSESSEE ACQUIRED A BENEFIT OF AN ENDURING NAT URE WHICH WILL CONSTITUTE ACQUISITION OF AN ASSET AND SO THE AMOUNT PAID FO R THE SAME IS A CAPITAL EXPENDITURE OR WHETHER THE ASSESSEE HAD ONLY ACQUI RED TECHNICAL KNOWLEDGE FOR THE MANUFACTURE OF ANY PARTICULAR ITEM FOR A SPECIF IC DURATION, AND HE ACQUIRED ONLY A LICENSE TO USE THE OTHER PARTYS PATENT AND KNOWLEDGE AND THE AMOUNT PAID WOULD ONLY BE A REVENUE EXPENDITURE. HAVING TAKEN A PROPER VIEW OF THE PRINCIPLES TO BE APPLIED, THE HIGH COURT ARRIVED AT THE FOLLOWING CONCLUSION: HAVING REGARD TO THE SAID CLAUSES, WE ARE CLEARLY OF THE OPINION THAT THE TRIBUNAL WAS RIGHT IN ITS CONCLUSION THAT THE WHOLE OF THE A MOUNT PAID BY THE ASSESSEE CONSTITUTES REVENUE EXPENDITURE AND HAS TO BE ALLOW ED AS A DEDUCTION. FROM THE TERMS OF THE AGREEMENT REFERRED TO ABOVE, THE FOLLO WING FACTS ARE CLEAR: (1) THE AGREEMENT ITSELF PROVIDES THAT WHAT WAS GRA NTED BY ATURIA TO THE ASSESSEE IS MERELY A LICENSE TO USE ITS PATENTS AND DESIGNS EXCLUSIVELY IN INDIA; (2) THE AGREEMENT IS FOR A DURATION OF 10 YEARS WITH THE PA RTIES HAVING THE OPTION TO EXTEND THE AGREEMENT OR RENEW THE SAME SUBJECT TO T HE APPROVAL OF THE GOVERNMENT OF INDIA; (3) DURING THE CURRENCY OF THE AGREEMENT, ATURIA HAD UNDERTAKEN NOT TO SURRENDER ITS PATENTS WITHOUT THE CONSENT OF THE ASSESSEE AND TO MAKE AVAILABLE TO THE ASSESSEE ANY IMPROVEMENTS, MODIFICATIONS AND ADDITIONS TO DESIGNS; (4) ATURIA HAS ALSO UNDERTAKE N TO ENABLE THE ASSESSEE TO DEFEND ANY COUNTERFEIT BY OTHERS AND ALSO HAD UNDER TAKEN TO SHARE THE EXPENSES WITH REFERENCE THERETO; (5) THE ASSESSEE SHALL NOT DISCLOSE TO THIRD PARTIES ANY OF THE DOCUMENTS MADE AVAILABLE BY ATURIA TO THE ASSES SEE WITHOUT HAVING RECEIVED A WRITTEN AUTHORIZATION FROM ATURIA. WE AR E OF THE OPINION THAT THE ABOVE FEATURES CLEARLY ESTABLISH THAT WHAT WAS OBTA INED BY THE ASSESSEE IS ONLY A LICENSE AND WHAT WAS PAID BY THE ASSESSEE TO ATURIA IS ONLY A LICENSE FEE AND NOT THE PRICE FOR ACQUISITION OF ANY CAPITAL ASSET. WE HEARD COUNSEL. WE ARE OF THE VIEW THAT THE HIGH COURT POSED THE CORRECT QUESTION THAT AROSE FOR CONSIDERATION AND ALSO APPL IED THE PROPER PRINCIPLES OF LAW TO THE INSTANT CASE. BY APPLYING THE PROPER PRI NCIPLES OF LAW TO THE AGREEMENT IN QUESTION, THE HIGH COURT CONCLUDED THAT THE AMOU NTS PAID TO THE COLLABORATOR IS ONLY A LICENSE FEE AND NOT THE PRICE FOR ACQUI SITION OF A CAPITAL ASSET. IT WAS CONCLUDED THAT THE ENTIRE PAYMENT CONSTITUTES REVEN UE EXPENDITURE AND THE QUESTION WERE ANSWERED IN FAVOUR OF THE ASSESSEE. WE ARE OF THE OPINION THAT THE REASONING AND CONCLU SION OF THE HIGH COURT ARE UNASSAILABLE. THE HIGH COURT RIGHTLY HELD THAT THE EXPENDITURE INCURRED IN THE PRESENT CASES BY THE ASSESSEE IS ONLY A REVENUE EXP ENDITURE. THESE APPEALS FAIL AND ARE DISMISSED WITH NO ORDER AS TO COSTS. 7 RESPECTFULLY FOLLOWING THE ABOVE JUDGMENT AND APPLY ING THE SAME TO THE FACTS OF THE PRESENT CASE, WE UNHESITATING HOLD THAT THE EXPENDITURE INCURRED IN THE PRESENT CASE DID NOT RESULT IN THE ACQUISITION OF A NY CAPITAL ASSET BUT ON THE OTHER HAND WAS ONLY FOR THE USE OF TRADEMARK AND TH EREFORE WAS REVENUE IN NATURE. WE THEREFORE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DELETE THE DISALLOWANCE MADE OF RS. 2,50,000/- ON ACCOUNT OF REVENUE EXPENS ES. 11. GROUND NO. 1,2 & 3 RAISED BY THE ASSESSEE ARE T HEREFORE ALLOWED. 12. THE APPEAL OF THE ASSESSEE IS THEREFORE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 03/05/2016 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR