TaxTMI 
TaxTMI 
2015 (8) TMI 426
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.... Tarun Mohan by way of royalty for the use of the brand name phoneytunes.com. 3. According to the appellant, the following substantial questions of law arise in these cases:- (i) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is justified in holding that royalty payment to a related person would be allowable for business expenditure u/s 37(1) of the Act whereas the same has not been exclusively and wholly incurred for business purposes? (ii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is justified in holding that royalty payment would be allowable business expenditure u/s 37(1) when the same has not been paid to the owner/holder of the patent, design, copy....
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.... to make ring tones on the basis thereof. In turn, he provided individual mobile users the tones through cellular operating companies. He paid royalty to the music companies in consideration of these agreements. He in turn was remunerated by collecting fees from the customers for downloading the ring tones etc. The Tribunal has come to a finding of fact that the said Tarun Mohan had invented technology through which ring tones can be created of the said songs. Whether it was an invention or not is not relevant. The fact is that he devised the manner of providing the said services. It appears that Tarun Mohan had also registered his copyright in respect of the word 'phoneytunes.com'. 5. On 18.02.2003, Tarun Mohan entered into an agreement w....
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....me) and for the use of brand name of phoneytunes.com a consideration of 2% of the gross revenue receipts under the relevant business after 2 years of closing date." 6. It is clear, therefore, that Tarun Mohan retained the brand name phoneytunes.com. He merely permitted the assessee to use the intellectual property right acquired by him, namely, the brand name/trade-mark phoneytunes.com. He had not assigned the same to the assessee, but only licensed the same to the assessee. 7. The Assessing Officer and the CIT (Appeals) wrongly came to the conclusion that Tarun Mohan being a Director of the respondent was not entitled to enter into an agreement for the transfer of his assets to the company. They held that the same person cannot enter int....