Income Tax Appellate Tribunal - Pune
Assistant Commissioner Of ... vs Kirloskar Ferrous Industries Ltd.,, ... on 10 March, 2017
आयकर अपील य अ धकरण पुणे यायपीठ "बी" पुणे म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
ी आर. के. पांडा, लेखा सद य एवं ी #वकास अव थी, या%यक सद य के सम&
BEFORE SHRI R.K. PANDA, AM & SHRI VIKAS AWASTHY, JM
आयकर अपील सं. / ITA No. 604/PUN/2015
%नधा(रण वष( / Assessment Year : 2010-11
Assistant Commissioner of Income-tax,
Circle - 14,
Pune.
.. Appellant
Vs.
Kirloskar Ferrous Industries Ltd,
A-13, Laxmanrao Kirloskar Road,
Khadki,
Pune - 411003
PAN: AAACK7297E
.. Respondent
Assessee by : Shri C.H.Naniwadekar
Department by : Shri Hemant Kumar C. Leuva
Date of Hearing : 08-03-2017
Date of Pronouncement : 10-03-2017
आदे श / ORDER
PER R.K.PANDA, AM :
This appeal filed by the Revenue is directed against the order dated 18/02/2015 of CIT (A) - 7, Pune relating to assessment year 2010-11.
2ITA No.604/PUN/2015, A.Y: 2010-11
2. The only effective ground raised by the Revenue reads as under:
"1. Whether on the facts and circumstances of the case and in law, the CIT(A) erred in allowing the claim of Royalty and not treating the claim of as capital expenditure.?"
3. Facts of the case in brief that the assessee is engaged in the business of manufacturing of Gray Iron Casting and Pig Iron. It filed its return of income on 18/09/2010 declaring total income of Rs.70,89,51,380/-. During the course of assessment proceedings the Assessing Officer observed from the details of office and administrative expenses that assessee has paid royalty for an amount of Rs.1,67,14,720/- to Kirloskar Proprietary Limited for use of Kirloskar name. He observed that in the preceding assessment year such claim was disallowed by considering the same as capital expenditure in nature. He, therefore, asked the assessee to explain as to why such expenditure should not be treated as capital expenditure in nature. Rejecting the various explanations given by the assessee and following the order of his predecessor in the immediately preceding assessment year, the Assessing Officer treated the amount of Rs.1,67,14,720/- paid to the parent company for using Kirloskar Brand as capital in nature. He accordingly disallowed the same and added to the total income of the assessee.
4. Before the CIT(A), it was argued that the Tribunal in assessee's own case in the immediately preceding assessment year has decided the issue in favour of the assessee. Based on the arguments advanced by the assessee and following the decision of the Tribunal in assessee's own case on this very issue, the ld. CIT(A) directed the Assessing Officer to delete the addition made on account of royalty payment. 3 ITA No.604/PUN/2015, A.Y: 2010-11 4.1 Aggrieved with such order of CIT(A) the Revenue in appeal before us.
5. After hearing both the sides, we do not find any infirmity in the order of CIT(A) directing the Assessing Officer to treat the amount of Rs.1,67,14,720/- paid to Kirloskar Proprietary Limited for use of Kirloskar name as revenue in nature. We find identical issue had come up before the Tribunal in assessee's own case in the immediately preceding assessment year. We find the Tribunal in ITA No.842/PN/2013 order dated 16/04/2014 has decided the issue in favour of the assessee by observing as under:
"7. We have carefully considered the rival submissions. The pertinent facts which emerge from the orders of the authorities below can be summarized as follows. The assessee is using the name 'Kirloskar' name is with M/s Kirloskar Proprietary Limited and in terms of an agreement, assessee pays a sum of Rs.1,00,000/- per annum as license or copyright fee to M/s Kirloskar Proprietary Limited for the use of name. Further, assessee has also entered into a User Agreement with M/s Kirloskar Proprietary Limited dated 24.11.2006 which was revised on 04.02.2008. In terms thereof the said concern, M/s Kirloskar Proprietary Limited has admitted assessee as a member and assessee also agreed to maintain the quality and to comply with the specifications prescribed by the said concern. M/s Kirloskar Proprietary Limited is acknowledged as the original conceiver, adopter, user and registered proprietor of the trademark 'Kirloskar'. For allowing the use of the trademark, M/s Kirloskar Proprietary Limited charges from assessee 0.25% of its annual turnover as royalty in terms of the method prescribed in the agreement. Similar payments were made in assessment years 2007-08 and 2008-09 as copyright fee and royalty to M/s Kirloskar Proprietary Limited. Having regard to the fact position, it is quite evident that the payments to M/s Kirloskar Proprietary Limited have been made only for the use of 'Kirloskar' name and not for the supply of any technical knowhow for production of goods. There is no material to support the plea of the Revenue that any enduring benefit has accrued to the assessee which would be in the capital field. In-fact, during the currency of the agreement with M/s Kirloskar Propritary Limited, the benefit which accrues to the assessee is in the revenue field, namely, in the course of carrying on of its business operations and the expenditure incurred in connection thereof would be revenue in nature. Therefore, in our considered opinion, the CIT(A) made no mistake in directing the Assessing Officer to treat the impugned expenditure as a revenue expenditure.
8. In view of the aforesaid discussion, we hereby affirm the order of the CIT(A), specially having regard to the findings recorded by him in para 7 of the impugned order, which have not been assailed by the Revenue before us on the basis of any cogent material or evidence.4 ITA No.604/PUN/2015, A.Y: 2010-11
9. In the result, the appeal of the Revenue is dismissed."
6. Since the ld. CIT(A) while deciding the issue in favour of the assessee has followed the decision of the Tribunal in assessee's own case in the immediately preceding assessment year, therefore, in absence of any contrary material brought to our notice by the ld. DR, we do not find any infirmity in the order of ld. CIT(A) on this issue. Accordingly the same is upheld and the ground raised by the Revenue is dismissed.
7. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced on the 10th day of March, 2017.
Sd/- Sd/- (#वकास अव थी / Vikas Awasthy) (आर. के. पांडा / R.K. Panda) या%यक सद य/JUDICIAL MEMBER लेखा सद य/ACCOUNTANT MEMBER पुणे / Pune; दनांक / Dated : 10th March, 2017 SGR
आदे श क- .%त0ल#प अ1े#षत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. आयकर आयु त(अपील) / The CIT(A)-7, Pune
4. धान आयकर आयु त / The CIT-5, Pune
5. वभागीय त न ध, आयकर अपील!य अ धकरण, "बी" ब#च, पण ु े / DR, ITAT, "B" Bench, Pune.
6. गाड& फ़ाइल / Guard File.
आदे शानस ु ार / BY ORDER, / / TRUE COPY / / सहायक पंजीकार / Assistant Registrar, आयकर अपील!य अ धकरण, पण ु े / ITAT, Pune