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<h1>Tribunal affirms royalty expenses as revenue expenditure, dismissing revenue's appeal.</h1> The Tribunal upheld the CIT (A)'s decision to treat royalty expenses as revenue expenditure, following the precedent set by the Hon'ble Delhi High Court ... Payment of royalty - revenue v/s capital expenditure - Held that:- As relying on assessee’s own case in Assessment Years 2007-08 and 2008- 09 payment of royalty is allowable revenue expenditure. Issues:1. Disallowance of royalty expenses as revenue expenditure.Detailed Analysis:The appeal filed by the revenue pertains to the order of CIT (Appeals)-XV, New Delhi for the assessment year 2009-10. The assessee company, engaged in providing security systems, declared a loss in its income tax return. The Assessing Officer disallowed a portion of royalty paid to M/s. Group 4 Holding, but the CIT (A) allowed the claim as revenue expenditure. The CIT (A) based its decision on previous judicial pronouncements and the decision of the Hon'ble Delhi High Court in the appellant's own case for earlier assessment years, where royalty expenses were considered revenue in nature. The revenue raised grounds of appeal challenging the disallowance of royalty expenses.During the hearing, the appellant's representative pointed out that the issue had been previously decided in favor of the assessee by the ITAT in the assessment years 2007-08 and 2008-09. The ITAT had relied on the decision of the Hon'ble Delhi High Court in the appellant's own case for earlier assessment years and allowed the royalty claim as revenue expenditure. Considering these facts, the Tribunal found no merit in the revenue's appeal and dismissed it, upholding the decision of the CIT (A) and the ITAT in favor of the assessee.Therefore, the Tribunal upheld the CIT (A)'s decision to treat the royalty expenses as revenue expenditure, following the precedent set by the Hon'ble Delhi High Court in the appellant's earlier cases. The appeal filed by the revenue was dismissed, affirming the treatment of royalty expenses as allowable revenue expenditure for the assessment year in question.
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