DCIT, CHENNAI V. Shriram Financial Products Solution (Chennai) Pvt Ltd., CHENNAI

ITA 733/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8691 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 24-03-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: R SIVARAMAN
• Keywords: Depreciation; Revenue expenditure
• Section: 37(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.733/MDS/2016 / ASSESSMENT YEAR : 2012-13 THE DY. COMMISSIONER OF INCOME TAX CORPORATE CIRCLE 6(1) CHENNAI VS. M/S SHRIRAM FINANCIAL PRODUCTS SOLUTION (CHENNAI) PVT. LTD GREAMS DUGAR, 4 TH FLOOR NO.149, GREAMS ROAD CHENNAI 600 006 [PAN AAPCS 5666 L ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI SHIVA SRINIVAS, JCIT /RESPONDENT BY : SHRI R. SIVARAMAN, ADVOCATE / DATE OF HEARING : 31 - 05 - 2016 ! / DATE OF PRONOUNCEMENT : 29 - 0 7 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-15, CHENN AI, DATED 24.9.2015 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISALLOW ANCE OF ROYALTY TO THE EXTENT OF ` 74,50,665/-. ITA NO.733/16 :- 2 -: 3. SHRI SHIVA SRINIVAS, LD. DEPARTMENTAL REPRESENTATIV E SUBMITTED THAT THE ASSESSEE HAS PAID ` 85,15,046/- TO SHRIRAM OWNERSHIP TRUST FOR USING THEIR LOGO IN THE ASSES SEES BUSINESS. THE ASSESSING OFFICER, HOWEVER, TREATED THE EXPENDITURE AS CAPITAL IN NATURE AND ALLOWED DEPRECIATION @ 12.5%. THE CIT(A ), HOWEVER, ALLOWED THE CLAIM OF THE ASSESSEE BY PLACING RELIA NCE ON THE ORDER OF THIS TRIBUNAL IN THE CASE OF ASSESSEES GROUP CONC ERN, M/S SHRIRAM TRANSPORT FINANCE CO. LTD. ACCORDING TO THE LD. DR , THE PAYMENT MADE BY THE ASSESSEE IS CAPITAL IN NATURE, THEREF ORE, THE CIT(A) OUGHT NOT TO HAVE ALLOWED THE SAME AS REVENUE EXPEN DITURE. SINCE THE PAYMENT WAS IN RESPECT OF INTANGIBLE RIGHT AND THE ASSESSING OFFICER HAS ALLOWED DEPRECIATION @ 12.5%, THE CIT(A ) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. 4. ON THE CONTRARY, SHRI R. SIVARAMAN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SHRIRAM OWNERSHIP TRUST IS AN INDEPENDENT TRUST AND ITS LOGO WAS USED BY THE ASSESSEE IN ITS BUSINESS. THE PAYMENT WAS MADE FOR THE PURPOSE OF USING THE LOGO ON TURNOVER BASIS, THEREFORE, THE CIT(A) HAS RIGHTLY ALLOWED TH E CLAIM OF THE ASSESSEE AS REVENUE EXPENDITURE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. SHR IRAM OWNERSHIP ITA NO.733/16 :- 3 -: TRUST IS A TRUST BY ITSELF, THEREFORE, ITS LOGO CAN NOT BE USED BY ANY OTHER CONCERN. THE OBJECT OF THE TRUST IS NOT TO D O BUSINESS. THE ASSESSEE-COMPANY WAS ESTABLISHED FOR THE PURPOSE OF BUSINESS. WHEN THE ASSESSEE-COMPANY USED THE LOGO BELONGS TO SHRIT AM OWNERSHIP TRUST, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT FOR THE PURPOSE OF USING THE LOGO, THE ASSESSEE HAS TO NECESSARILY MAKE THE PAYMENT. IN THE CASE BEFORE US, THE PAYMENT WAS MADE ON TURN OVER BASIS, THEREFORE, THE SAME HAS TO BE ALLOWED AS REVENUE EX PENDITURE U/S 37(1) OF THE ACT. THIS TRIBUNAL DO NOT FIND ANY RE ASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2016, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 29 TH JULY, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF