TaxTMI 
TaxTMI 
2013 (11) TMI 1244
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....ompany has failed to establish that the use of logo has resulted in windfall profit to the assessee-company. The assessee has disclosed total income of Rs.32,75,15,122/- and profit before tax which was inclusive of depreciation of Rs.1,53,83,229/- comes to 4.70%, which cannot be said to be windfall profit by using the logo. Further, since it was not registered, the assessee-company was at liberty to use ATE trade mark. The failure on the part of ATE Enterprise Pvt. Ltd. to get its logo 'ATE' registered as trade mark, since 1939 to 2008, i.e. during the span of 69 years itself, is suggestive of the value attached to the logo and benefit can be had by use of that logo. Further, the assessee had paid commission on sale to ATE Market Pvt. Ltd., who is selling agency of the company's product. The AO, therefore, held that in view of the provisions contained in section 40A(2)(a) r.w.s. 40A(2)(b), ATE Enterprise Pvt. Ltd., is a person specified under section 40A(2)(b), the payment is excessive and unreasonable having regard to the fair market value of the legitimate need of the business or profession of the assessee-company or benefit arrived for accruing to it therefrom. Thus, the AO made....
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....at company dated 3.9.2003, it is revealed that A.T.E.E.P.L is engaged in the business of making investments, leasing and licensing properties. Therefore under these circumstances it is not clear as to how the logo of a company which is engaged in a business totally different from the appellant would help its business. 8.3 There is no dispute about the fact that A.T.E is not a registered Trade Mark and it has been claimed that as per para 3.4 of the agreement entered into by the appellant with that company, A.T.E.E.P.L. has made an application for registration of Trade market vide an application dated 8.8.2001. there is nothing on record to show that it was granted registration even upto the appellate proceedings under reference. Therefore, in these circumstances, it is very clear that A.T.E could be used by any concern for propagating its product. It defies the logic that when the A.T.E is not registered as Trade Mark by that company in last 70 years of its incorporation then how such name enjoys a brand value. In normal circumstances the value of Trade Mark comes from the goodwill generated by the company holding the same. I have also gone through the profit and loss....
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....any Court inferior to a District Court having jurisdiction to try the suit. Thus, it was submitted that even if the logo was not registered, the owner of the logo has the right to sue the party using the same without his permission. Therefore, the CIT(A) was not justified in confirming the disallowance made by the AO for logo fee on the ground that the logo was not registered under the Trade Marks Act, 1999. In the end, he submitted that the issue of registration was only academic as, the assessee has filed before the Tribunal the copy of registration certificate of the logo in the ATE products. He also placed reliance on the decision of the Hon'ble Supreme Court in the case of Skyline Education Institute P. Ltd. Vs. SL Vaswani & Anr., reported in AIR 2010 SC 3221 in para 20 of the order has held that even an unregistered prior user of a name can institute action for passing off and seek injunction against the subsequent user of the same name by proving that misrepresentation by the defendant to the public that the goods/services offered by him are that of the plaintiff and such misrepresentation has caused harm to the goodwill and reputation of the plaintiff or the plaintiff demon....
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....royalties, interest, dividend etc., besides earning through sale of capital assets, and the same does not show logo had any brand value. We find that the genuineness of the payment of Rs. 30,88,359/- for use of logo brand is not in dispute. It is also not in dispute that logo was used in the business of the assessee-company and such user was under an agreement with A.T.E. Enterprises P. Ltd., which is also holding company of the assessee. We find force in the arguments of the learned AR that for making payment of logo brand, which was used by the assessee in its business, it is not necessary that the assessee must have windfall income. Further, merely because the commission was paid to the payee-company for marketing the products of the assessee, it could not be held that the assessee was not liable to pay logo brand charges when such logo was used in the business of the assessee. Further, we agree with the contention of the learned AR that it is not necessary that logo must have been registered by the company to whom the logo brand charges has been paid. If the logo brand was used by the company from an earlier period, and very same logo was used by the assessee-company on payment....
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....ayment of interest on the deposit received from Mr. Amol P. Bhagwati, by invoking the provisions of section 40A(2)(b). 10. Brief facts of the case are that the AO observed that the assessee has paid interest to various persons ranging from 8.5% to 9% per annum except in the case of deposit from Amol Bhagwati, a director of the company, on which the interest at the rate of 14% was paid. He observed that the rate of interest in the market during the same period was of 10% to 12% per annum. Accordingly, the AO treated the interest rate at 14% paid to Amol P. Bhagwati to be excessive and unreasonable within the meaning of section 40A(2)(b) of the Act and restricted the same to 10% per annum. The AO, accordingly, disallowed Rs.72,000/- and added the same to the income of the assessee. 11. On appeal before the learned CIT(A), the assessee submitted that the action of the AO in disallowing an amount of Rs.72,000/- out of expenditure incurred on payment of interest was misconceived and misdirected. The assessee had submitted before the AO that the loan of Rs.18.00 lacs was contracted from Mr.Amol P. Bhagwati, Director in August, 2002. At that material point of time, when loan was contrac....
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....r years has been allowed by the department, and therefore, there was no justification in considering the said amount as unreasonable in the year under appeal. 14. The learned DR, on the other hand, supported the order of the AO. 15. We have heard rival submissions and perused the orders of the lower authorities and material available on record. In the instant case, the AO disallowed the interest payment of Rs. 72,000/- out of the total interest payment made to Shri Amol P. Bhagwati at the rate 14% per annum by invoking the provisions of section 40A(2)(b) of the Act on the ground that the interest paid to other persons ranged between 8.5% to 9%. On appeal, the learned CIT(A) confirmed the action of the AO. The contention of the assessee is that loan from Shri Amol P. Bhagwati was taken in the year, August, 2002 and not during the assessment year under appeal, and during that time the prevailing rate of interest was ranging from 15% to 18%. We find that the genuineness of the payment of interest made to the directors is not in dispute. Further, no material has been brought on record by the Revenue to show that the prevailing rate of interest during the period August, 2002 when the ....
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.... to negotiate for the orders, products specifications etc. The total exports to Germany during A.Y.2006-2007 and 2007-2008 was Rs.153.12 lacs and Rs.268.19 lacs respectively. According to the AO , the submission is general and no enough evidence was produced with regard to the persons contacted, business negotiated and orders received or 'MOU' signed, and therefore, the expenditure cannot be considered as incurred for the purpose of business of the assessee, and accordingly, disallowed the same. He further observed that Shri P.K. Bhagwati, Director of the company spent Rs.42,1255/- on tour to Europe and the assessee-company failed to produce any evidences with regard to the outcome of the visit, and therefore, the AO considered the expenditure having not been incurred for the business of the assessee. Further, the AO found that Shri A.S.Desai, CEO had made trip to China which also supported by any evidence to show that expenses incurred for the business purpose of the assessee-company, and disallowed the same. 18. On appeal before the learned CIT(A), the assessee contended that the expenditure on foreign travelling were incurred for the purpose of business of the assessee, and tha....
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....ue is dismissed. 22. The ground no.2 of the Revenue's appeal is directed against the order of the learned CIT(A) in deleting the disallowance of Rs.27,125/- out of commission paid. 23. Brief facts of the case are that the AO disallowed the commission paid to Eastex Trading Co., Taiwan on the ground that the assessee paid at the rate of 28.72% on the sale proceeds as against 12.5% to 15% in some other cases. 24. On appeal before the learned CIT(A), the assessee submitted that it had clarified before the AO that the commission was paid on the sale made to M/s.Nienshing Textile Co. Ltd., Taiwan which included sales of ACS flyers, the unit selling price of which was US dollar 95. The prices realised by the company on the same products from other customers in the export market was in the range of USD 70 to 80. However, the agent helped the company to fetch higher prices for which additional commission was agreed to be paid. 25. The CIT(A) after considering the submissions of the assessee, the deleted the addition by observing that the disallowance was made by the AO without appreciating the facts of the case, which cannot be sustained. 26. The learned DR supported the order of the ....
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....'s patent has not been resulted in bringing about a new capital asset or benefit of enduring nature. The expenditure has been incurred for preserving and maintaining the assessee's existing intellectual property right of patent in respect of its products, therefore, the expenditure in question is eligible in full. The learned CIT(A) after considering the submissions of the assessee, deleted the disallowance by observing that the AO has disallowed the expenditure without appreciating the nature of expenses that these were incurred for acquisition of intellectual property in the form of patent, copy right and trade mark. The assessee has not acquired any capital asset out of the expenses under reference, and therefore, the disallowance was not justified to hold that the same to be capital in nature. 30. The learned DR supported the order of the AO, whereas the learned counsel for the assessee relied on the decision of the Hon'ble Gujarat High Court in the case of CIT Vs. Cadila Healthcare Ltd., 31 Taxmann.com 300 (Guj), wherein it was held that fact that a trade mark after registration could be separately assigned, and not as a part of the goodwill of the business only, does not all....
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.... brief facts of the case are that the AO observed that the assessee has paid royalty to Stovec Industries Ltd. on sale of endrings. The assessee explained that the rate of royalty was Rs.4/- per end-ring of its average selling price, and as the Stovec Industries Ltd. was the original developer of this product and the company had obtained know-how for manufacture of end-rings, the royalty was paid to M/s.Stovec. The AO did not find the explanation of the assessee as acceptable, and made disallowance by invoking the provisions of section 40A(2)(b) of the Act. 34. On appeal before the learned CIT(A), the assessee has reiterated the submissions, which were made before the AO. The CIT(A) after considering the submissions of the assessee, deleted the disallowance on the ground that the AO without bring cogent facts on record made the impugned disallowance. He has not brought any material on record to show that how the payments were excessive or unreasonable within the meaning of section 40A(2)(b) of the Act. Therefore, the learned CIT(A) deleted the addition. 35. The learned DR relied on the order of the AO, whereas, the learned counsel for the assessee relied on the order of the CIT(A....
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....ention, he relied on the decision of the CIT Vs. Udaipur Distillery Company Ltd., 17 DTR 270 and the decision of the Hon'ble Supreme Court in the case of J.K. Wooden Manufacturers Vs. CIT, 72 ITR 612. The learned CIT(A) after considering the submissions of the assessee deleted the disallowance by observing that the AO, while making the disallowance under reference, has not brought on record how the commission paid to the person specified u/s.40A(2)(b) was excessive and unreasonable. The learned CIT(A) observed that it was settled law that before invoking the provisions of section 40A(2)(b), the AO has to establish that how the expenses made by the assessee are excessive keeping in view the market value of goods, services or facilities for which payment was made, the legitimate needs of the business and benefit derived accrued to the assessee. The learned CIT(A) relied on the decision of the ITAT, Delhi Bench in the case of Metal Rolling Mills P. Ltd. Vs. DCIT, 107 PTJ 336, wherein it was held that reasonableness was to be decided on the basis of fair market value of the goods, services or facilities. The expression used in section 40A(2) is "any expenditure" which means that each e....