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Principal Commissioner Of Income Tax, ... vs M/S Remfry And Sagar on 14 November, 2022

Author: Manmohan

Bench: Manmohan, Manmeet Pritam Singh Arora

                              $~S-39
                              *     IN THE HIGH COURT OF DELHI AT NEW DELHI
                              +     ITA 449/2022
                                    PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-12
                                                                              ..... Appellant
                                                 Through: Mr.Abhishek Maratha, Sr.Standing
                                                          Counsel.

                                                        versus

                                    M/S REMFRY AND SAGAR                                 ..... Respondent
                                                        Through:     Mr.Aditya Vohra, Advocate.

                              CORAM:
                              HON'BLE MR. JUSTICE MANMOHAN
                              HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
                                                        ORDER

% 14.11.2022 CM APPL.48157/2022 (exemption) Allowed, subject to all just exceptions.

Accordingly, the application stands disposed of.

Keeping in view the averments in the application, the delay in re- filing the appeal is condoned.

Accordingly, the application stands disposed of.

Present Income Tax Appeal has been filed challenging the Order 26th July, 2019 passed by the Income Tax Appellate Tribunal ('ITAT') in ITA No.2979/Del/2016 for the Assessment Year 2015-16. Signature Not Verified Digitally Signed By:JASWANT SINGH RAWAT Signing Date:15.11.2022 18:05:14 Learned counsel for the appellant states that the ITAT has erred in deleting the disallowance made on account of license fees paid to M/s. Remfry & Sagar Consultants Pvt. Ltd. (RSCPL) for the use of goodwill by the assessee. He states that the ITAT has erred in not considering that such segregation of goodwill from the legal practice cannot be permitted for the reason that under the Advocates Act, 1961, the goodwill earned by an Advocate cannot be alienated to any person or company who is not entitled to practice under the Advocates Act, 1961.

Learned counsel for the appellant further states that a similar issue is pending adjudication before this Court in assessee's own case in ITA No.199/2017. Accordingly, admit.

The following questions of law arise for consideration:-

(i) Did the ITAT fall into error in allowing the license fee paid to M/s Remfry & Sagar for use of goodwill by the assessee, having regard to the provisions in the Bar Council Rules and the Advocate's Act, 1961?

(ii) Did the ITAT overlook the effect of first Explanation to Section 37 of the Income Tax Act, 1961, in the circumstances of the case?

(iii) Whether the ITAT fell into error in holding that the existence or otherwise of a devise, i.e. use of goodwill, was irrelevant in the circumstances of the case?"

Issue notice. Mr.Aditya Vohra, learned counsel for the respondent, accepts notice.

List the present appeal along with ITA No.199/2018 on 21st August, 2023. The contesting parties are also directed to file their short written submissions not exceeding three pages each along with the judgments that they wish to rely upon at least one week prior to the next date of hearing.

MANMOHAN, J MANMEET PRITAM SINGH ARORA, J NOVEMBER 14, 2022 TS Signature Not Verified Digitally Signed By:JASWANT SINGH RAWAT Signing Date:15.11.2022 18:05:14