Tribunal confirms deductions for interest expenses and trade mark payments in recent decisions.

The Tribunal upheld the decisions of the CIT(A) in both appeals, dismissing the Revenue's appeals and confirming the treatment of interest expenses and trade mark payments as allowable deductions or revenue expenditures, as appropriate. The disallowance of interest expenses to Naksha Impex was overturned as the borrowed money was used for business purposes. Similarly, the payment to Vishnu & Company Trade Mark Pvt. Ltd. was deemed revenue expenditure, not capital, as it was not for acquiring technical know-how. The Tribunal also dismissed the challenge regarding Trade Mark License Utilization as revenue expenditure based on a previous decision.

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Issues:
1. Disallowance of interest expenses to Naksha Impex.
2. Treatment of payment to Vishnu & Company Trade Mark Pvt. Ltd. as capital expenditure.
3. Disallowance of Trade Mark License Utilization as revenue expenditure.

Analysis:
1. Issue 1: Disallowance of interest expenses to Naksha Impex
The Revenue appealed against the deletion of disallowance of Rs. 88,19,558/- made on account of interest expenses to Naksha Impex for A.Y. 2010-11. The Assessing Officer (A.O.) found the interest paid to Naksha Impex at 15% and 18% to be higher than other unsecured loans. The A.O. disallowed the excess interest paid, leading to the addition. However, the CIT(A) allowed the deduction, stating that as long as the borrowed money was used for business purposes, it was allowable under section 36(1)(iii) of the Act. The Tribunal upheld the CIT(A)'s decision, noting no adverse findings on the utilization of borrowed money from Naksha Impex and the absence of related party transactions.

2. Issue 2: Treatment of payment to Vishnu & Company Trade Mark Pvt. Ltd. as capital expenditure
The second grievance of the Revenue related to the deletion of the addition of Rs. 5,32,83,949/- made on account of payment to Vishnu & Company Trade Mark Pvt. Ltd. for the use of trade mark, treated as capital expenditure by the A.O. The A.O. disallowed the payment as capital expenditure, considering it a Trade Mark license utilization fee, and allowed depreciation instead. However, the CIT(A) directed the A.O. to delete the addition, stating that the payment was not for acquiring technical know-how and should be treated as revenue expenditure. The Tribunal upheld the CIT(A)'s decision, emphasizing that the Trade Mark was owned by Vishnu & Company Trade Mark Pvt. Ltd., and the CBDT circular cited by the A.O. was not applicable.

3. Issue 3: Disallowance of Trade Mark License Utilization as revenue expenditure
In the appeal for A.Y. 2011-12, the Revenue challenged the deletion of the addition of Rs. 2,23,77,009/- on account of disallowance of Trade Mark License Utilization treated as revenue expenditure. The Tribunal dismissed this ground, referring to a similar issue addressed in a previous appeal (ITA No. 2046/Ahd/2013) and upholding the dismissal based on the detailed reasons provided in the earlier decision.

In conclusion, the Tribunal upheld the decisions of the CIT(A) in both appeals, dismissing the Revenue's appeals and confirming the treatment of interest expenses and trade mark payments as allowable deductions or revenue expenditures, as appropriate.

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