TaxTMI 
TaxTMI 
2016 (7) TMI 1095
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....C(3) and 250 of the Income Tax Act, 1961 (herein after referred to as 'the Act'). 2. The Revenue has raised the following grounds:- ''2.1. The CIT(A) erred in holding that royalty payments made by the assessee to Mls Chevron Oronite Company LLC USA are revenue in nature. 2.2. The CIT(A) ought to have appreciated that in the relied upon decision, ITAT had given the decision mainly based upon the mode of payment of royalty of the assessee. 2.3. The CIT(A) ought to have appreciated that the mode of payment or quantification of the same in relation to the turnover cannot alter the basic purpose i.e. infusion of new technology for which the payment was made. 2.4. The CIT(A) ought to have appreciated the fact that in the relied upo....
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....r Pricing Officer (TPO), Chennai to determine Arm's Length Price (Arms Length Price) in respect of the transactions. The ld. TPO vide order dated 07.01.2014 in C.R. No.1-210/TPO-II/A.Y. 2010-2011 observed and concluded on determination of downward adjustment of cost at A19,28,47,000/- on international transactions with Associate Enterprises, further immediately, under rectification proceedings, the ld.TPO revised the order u/s.92 CA(3) of the Act dated 07.01.2014 determining the downward adjustment of cost to A3,83,93,740/- and the ld. Assessing Officer made an TPO addition to the returned income alongwith other additions. The ld. Assessing Officer found that the assessee has made payments of Royalty to M/s. Chevron Oronite Company LLC, USA....
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.... Therefore, ld. Assessing Officer distinguished decision and disallowed the payment of royalty and allowed depreciation @25% and excess claim of A5,14,35,000/- was brought to tax. Subsequently ld. Assessing Officer under provisions of Sec.144C(1) of the Act made above two additions in Draft assessment order dated 07.03.2014 and served on the assessee under provisions of Sec. 144C(2) of the Act. The assessee company has option to file objections before Dispute Resolution Panel (DRP) within thirty days from the date of receipt of assessment order u/s.144C(1) of the Act. The ld. Authorised Representative filed letter with ld. Assessing Officer after receipt of draft assessment order on 08.04.2014 mentioning that as against the Draft Assessment....
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....n case and held that the royalty paid to M/s. Chevron Oronite LLC is a revenue expenditure and partly allowed the appeal. Aggrieved by the Commissioner of Income Tax (Appeals) order, the Revenue has assailed an appeal before Tribunal. 5. Before us, the ld. Departmental Representative reiterated that Commissioner of Income Tax (Appeals) has erred in considering royalty payments made to M/s. Chevron Oronite Company LLC, USA in the nature of revenue expenditure and deleted relying on the decisions of Tribunal in assessee's own case and overlooked the findings of the ld. Assessing Officer on the payment of quantified amount based on the turnover and technology transfer which takes the characteristic of intangible assets i.e. licence, trade m....
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....n'ble High Court of Madras and the same is pending. This Tribunal is of the considered opinion that mere pendency of appeal before Hon'ble High Court cannot be a reason to take a different view. So, considering the decision of Co-ordinate Bench of the Tribunal in assessee own case in ITA No.1437, 1438 & 1439/Mds/2012, assessment years 2003-04, 2005-06 & 2006-07 observed at para 4 at page 2 of his order as under:- 4. We have perused the orders and heard the rival submissions. We find that a similar issue had come up before this Tribunal in Revenue's appeal for assessment years 1999- 2000 to 2002-03 as also in assessment year 2004-05. In its order dated 17th June, 2011for assessment year 2004-05 in I.T.A. No. 951/Mds/2009, it was held by c....
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....sis. The decision relied upon by the learned Commissioner of Income Tax (Appeals) is on the facts that the assessee could continue to use the technology even after the expiry of the period of payment of royalty. Therefore, when the lump sum royalty was separately agreed and paid, then the running royalty, in the facts and circumstances, would only be a revenue expenditure paid for the use of the licence, trade mark and technical information for a particular period. Accordingly, this issue is decided in favour of the assessee and against the Revenue." 8. Respectfully following the order of this Tribunal for the earlier assessment years, claim of the assessee has to be allowed for the impugned assessment year as well. Hence, appeal o....