TaxTMI 
TaxTMI 
2011 (7) TMI 65
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....nst the impugned common order dated 10.07.2009 of the ITAT (for short 'the Tribunal'). These pertain to assessment years 2003-04 and 2002-03 respectively. ITA 763/2011 is against the impugned order dated 03.07.2009 of the Tribunal and it pertains to assessment year 2005-06. 3. It so happened that ITA 1943/2010 pertaining to assessment year 2003-04 came to be heard by us prior in time than the other two appeals. This appeal was admitted only on one substantial question of law which is as under: "Whether learned ITAT/CIT(A) erred in deleting the addition of Rs.40,30,509/- on account of Royalty, ignoring that payment made as royalty has element of Capital Expenditure?" 4. In the other two appeals viz ITA 763/2011 ....
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.... mark and technical knowhow in pursuance of agreement dated 20.06.2002 through Group 4 Holding Pvt. Ltd. on the basis of 1% of net sales. The payment of the royalty was approved by the Government of India.The Assessing Officer held the payment of royalty in lieu of technical knowhow in the nature of enduring advantage for exclusive use and therefore, on ad-hoc basis he held that 25% of the royalty to be construed as payments of the capital nature. It is noted that identical order was passed by the Assessing Officer in the assessment year 2002-03 and also in the assessment year 2005-06. The assessee preferred appeal against the order of the Assessing Officer before CIT(A). The order of the Assessing Officer passed in the assessment year 2002....
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....her party give 6 months written notice to other party prior to the end of any such 5 year period that the agreement should not be renewed. Clause 17 of the sub license agreement acknowledges that G4F has the right to enforce, or to enjoy the benefit of any term of this agreement which is expressly or impliedly in favour of G4F. In clause 4.6 of the sub license agreement, it has been provided that on termination or expiration of the sub license agreement, the assessee shall return all G4F knowhow obtained in pursuant to the Agreement. At Clause 4.7 it has been provided that on termination or expiration of the agreement, the appellant/assessee shall not thereafter make any use of the trade mark, trade name or G4F knowhow and shall forthwith c....
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....nue expenditure. In the case of Goodyear (I) Ltd. Vs. ITO 73 ITD 189(Delhi), the assessee had not acquired ownership right of technical knowhow but transfer of use of licenses. There was no advantage of enduring nature and hence it was held to be a case of revenue expenditure. In the case of Travancore Sugar and Chemicals Ltd. 62 ITR 566 (SC) it was held that whenever a payment is based on a percentage of turnover or profits, it necessarily has no relation to the capital value of the asset, because it cannot be known at the time of the agreement what the turnover or profits will be over a period of years. In another case reported as DCIT Vs. Swaraj Engines Ltd. (2002) 124 Taxman 188, the Tribunal held, revenue payment is allowable as revenu....