2016 (1) TMI 252

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....is engaged in the business of manufacture and sale of pharmaceutical products and agro chemical products such as insecticides, pesticides etc. The assessment of the year under consideration was reopened by the assessee u/s 148 of the Act and completed the same by making various additions. The appeals filed before Ld CIT(A)/ITAT was partly allowed and some of the issues were restored to the file of the AO. The Tribunal confirmed the disallowance of payment of technical know how fee (patent) claimed by the assessee as revenue expenditure, but treated by the AO as Capital expenditure. The amount so disallowed was Rs. 2,52,09,490/- and the AO allowed depreciation of Rs. 63,02,702/- thereon. Accordingly, the net addition made by the AO was Rs. 1....

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....red by M/s GDS with the new group, the assessee was allowed to use the name and trade marks for a period of five years ending on 31.05.1998 against payment of royalty on annual basis. After expiry of the five years, another agreement was entered on 21-12-1998 (amendment agreement), as per which the assessee was permitted to use the name "SEARLE" as part of its corporate name for a further period of 5 years. Upon expiry of second 5 year period, the assessee changed its name to "RPG Life Sciences Ltd" and the assessee was allowed to use the registered trademarks of GDS and produce the goods for additional period of 50 years upto 31-05-2048 on payment of consolidated payment of US $ 500000. As per the amendment agreement, no annual royalty is ....

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....cense to use the trade mark and also license to use the technical know. Hence the payment is in the nature of revenue expenditure only. He further submitted that the assessee has paid a lump sum amount for using the license for a period of 50 years instead of paying on annual basis. Hence the assessee claimed the same as revenue expenditure and the view taken by the assessee is now supported by the decision rendered by the Hon'ble jurisdictional Bombay High Court in the case of CIT Vs. Essel Propack Limited (2010) (325 ITR 185). He also placed reliance on host of other case laws. Accordingly he submitted that the assessee has made a legitimate claim, but the same was not acceptable to the AO and the said disallowance shall not give rise....