TaxTMI 
TaxTMI 
TaxTMI 
2013 (9) TMI 79
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....ent grounds which relate to disallowance of expenditure on trade mark and disallowance of foreign exchange fluctuation loss. The facts concerning the disallowance of expenditure on acquisition of trade mark are that the Assessing Officer during the assessment proceedings noted that the assessee in terms of agreement dated June 1, 1998 with Hari Mohan Puri had acquired his rights, title and interest in the brand "Libra" and the right to manufacture and market sales, weighing device, equipment or instruments both mechanical or electronic for lump sum payment of Rs. 1 crore. The assessee had written off the said sum of Rs. 1 crore during the assessment years 1999-00 to 2004-05 as under: Financial year Assessment year Amount written off (Rs.) 1st June, 1998 to 31st March, 1999 1999-00 16,66,667 1999-00 2000-01 20,00,000 2000-01 2001-02 20,00,000 2001-02 2002-03 20,00,000 2002-03 2003-04 20,00,000 1st April, 2003 to 31st May, 2003 2004-05 2,33,333 1,00,00,000 The Assessing Officer asked the assessee to explain as to why the amount paid for acquisition for trade mark should not be disallowed as capital expenditure. The asses....
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....tted that, in case, expenditure was treated as capital expenditure, the assessee should be allowed depreciation under section 32 of the Act at 25 percent as brand was an intangible asset. The Commissioner of Income-tax (Appeals) however did not accept the contentions raised. It was observed by him that the assessee had acquired brand named "Libra" along with right to manufacture on lump sum payment of Rs. 1 crore. The acquisition of the brand became one of the foundation to carry out the business. The brand name which had necessary goodwill in the market had been exploited by the assessee to conduct business. It was therefore, an asset with which the business was being carried on. The Commissioner of Income-tax (Appeals) accordingly held that the expenditure incurred on acquisition of brand was capital expenditure. As regards alternate claim of the assessee to allow depreciation if the amount was treated as capital the Commissioner of Income-tax (Appeals) observed that disallowance of expenditure as capital in nature did not necessarily mean that asset had been created in such form and substance on which depreciation was allowable. He, therefore rejected the alternate claim also an....
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....pital asset which was not allowable. It was also submitted that merely because the claim had been allowed in the earlier year, it did not give any right or confer any legal authority in favour of the assessee that in subsequent years also the mistake should be allowed to perpetuate as held by the hon'ble High Court of Rajasthan in the case of CIT v. Foss Electronic [2003] 263 ITR 125 (Raj). We have perused the records and considered the rival contentions carefully. The dispute is regarding nature of expenditure incurred by the assessee on acquisition of brand name/trade mark "Libra". The said brand had been acquired by the assessee vide agreement dated June 1, 1998. A perusal of the agreement placed at page 15 of the paper book shows that the assessee had been allowed only exclusive licence to use the brand name. Thus, as per agreement the assessee had been allowed the use of brand name for a period of five years and was not the owner of the brand. However, subsequently on expiry of the five year period, the assessee sold the business along with brand name to a third party. Based on such action, it has been concluded by authorities below that the assessee was actually owner of the....
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....il and Natural Gas Corporation Ltd. v. Deputy CIT (Assessment) [2003] 261 ITR (AT) 1 (Delhi). It was accordingly urged that the claim should be allowed. The Commissioner of Income-tax (Appeals) however, did not accept the contentions raised. It was observed by him that the foreign currency loan was not only to enhance its working capital but also enhance its assets specially loan of Rs. 10 lakhs CHF. It was also observed by him that the loan was sanctioned and approved in 1998 and only in the financial year 200304 part payment of the loan had been made. The Commissioner of Income-tax (Appeals) also noted that the assessee changed the accounting policy of claiming loss only after March 31, 2001. In the year 2000-01, there was gain on account of restatement of foreign currency loss which had not been offered for tax. Further the claim made by the assessee was notional as liability remained undischarged. The Commissioner of Income-tax (Appeals) also observed that loss could not be allowed on the basis of entry in the books of account. There being no real loss, the Commissioner of Income-tax (Appeals) confirmed the disallowance made by the Assessing Officer aggrieved by which the asses....
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.... capital employed in the business. As regards the year of allowability, the claim has to be allowed on the basis of restatement of the liability on the balance-sheet date as held by the hon'ble Supreme Court in the case of Woodward Governor India P. Ltd. [2009] 312 ITR 254 (SC). Thus the claim of the assessee is allowable. In case there is gain in a year and the assessee has not offered it to tax, the Revenue is free to take action under law. In these years, admittedly there is loss which is allowable as deduction. We, therefore, set aside the order of the Commissioner of Income-tax (Appeals) and allow the claim of the assessee. The appeal of the Revenue in I. T. A. No. 2574/M/2007 (assessment year 2002-03) : The only dispute raised by the Revenue in this appeal is regarding assessability of capital gain on sale of personal weighing scale business. The Assessing Officer noted from the accounts that the assessee received a sum of Rs. 30 lakhs on sale of personal weighing scale business at Goa. The assessee treated the same as a capital receipt not taxable. The Assessing Officer, therefore, asked the assessee to explain as to why the amount should not be treated as capital gain and ....