Appeal on Royalty Disallowance Delayed & Dismissed

The Revenue's appeal against the deletion of disallowance of royalty claim was delayed by 331 days. The Assessing Officer sought condonation of the delay, which was granted. The Tribunal upheld the CIT(A)'s decision to delete the disallowance of royalty payment, citing previous rulings. The appeal was dismissed on 29th July 2022 in Chennai, affirming the decision in favor of the assessee.

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Issues:
- Delay in filing the appeal by the Revenue.
- Disallowance of royalty claim by the Assessing Officer.
- Justification for royalty payment and its treatment as capital expenditure.
- Admissibility of the appeal and decision on the disallowance of royalty payment.

Delay in filing the appeal:
The Revenue filed an appeal against the order of the ld. Commissioner of Income Tax (Appeals) 15, Chennai, regarding the deletion of disallowance of royalty claim. The appeal was delayed by 331 days, but the Assessing Officer filed an affidavit for condonation of delay, stating it was not wilful. The delay was condoned, and the appeal was admitted for adjudication.

Disallowance of royalty claim:
The assessee, a non-banking finance company, claimed royalty payment of &8377;49,08,44,590 to Shriram Ownership Trust, which was classified as a payment to a related party. The Assessing Officer disallowed &8377;36,81,33,443 of the royalty payment, allowing depreciation on the rest. The ld. CIT(A) deleted the disallowance based on the decision of the ITAT in the assessee's own case for earlier assessment years. The Revenue appealed, arguing against the CIT(A)'s decision.

Treatment of royalty payment as capital expenditure:
The Tribunal referred to a previous decision regarding a similar issue on royalty payment. The Tribunal held that the payment for the right to use a logo cannot be treated as capital expenditure. The Tribunal confirmed the CIT(A)'s decision to delete the disallowance of royalty payment based on the earlier decision and found no reason to interfere.

Admissibility of the appeal and decision on royalty disallowance:
The Tribunal dismissed the Revenue's appeal, stating that the decision of the CIT(A) to delete the disallowance of royalty payment was correct. The Tribunal followed the earlier decision and found no grounds to reverse the CIT(A)'s order. The appeal filed by the Revenue was ultimately dismissed on 29th July 2022 at Chennai.

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