Distribution fee taxability as royalty was remanded for fresh merits review after earlier favourable years were noted.

The Tribunal considered a belated claim on the taxability of distribution fee as royalty and found that it required examination on merits, especially since the issue had been decided in the assessee's favour in earlier years. Applying the interests of justice and the principle that only legitimate tax should be assessed and collected, it restored the matter for de novo consideration by the Assessing Officer with an opportunity of hearing to the assessee. The claim was therefore admitted for fresh adjudication, and the assessee succeeded in the appeal.

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Issues: Whether the assessee's belatedly raised claim concerning the taxability of distribution fee should be admitted and the matter remanded for fresh adjudication on merits.

Analysis: The appeal challenged the treatment of distribution fee as royalty and the refusal to condone delay. The Tribunal noted that the claim had been raised for the first time before the appellate authority, but considered that the issue had earlier been decided in the assessee's favour in related years and that the claim required examination on merits. Relying on the interest of justice and the principle that only legitimate tax should be assessed and collected, the Tribunal found it appropriate to restore the matter for fresh consideration by the Assessing Officer with an opportunity of hearing to the assessee.

Conclusion: The matter was remanded to the Assessing Officer for de novo consideration on merits, and the assessee succeeded in the appeal.

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