TaxTMI 
TaxTMI 
2017 (3) TMI 1520
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....her on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the addition on account of tax on trademark / brand name royalty without appreciating the fact that as per Article 13 of the Agreement, no condition exists for royalty being net of taxes and approval taken from Reserve Bank of India cannot be taken to be augmenting the terms of agreement with the principal ? (C) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in upholding the deletion made by CIT(A) of the disallowance of royalty on traded goods based on Article 7 of the agreement with the principal? (D) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing the royalty payment @ 2% instead of 1% as was done by the TPO? (E) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the brand usage royalty was payable without a formal deed and based on commercial expediency, despite the assessee failing to provide sufficient evidence to prove its liability during the period ? (F) Whether on the....
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....ra), the question (A) as proposed does not give rise to any substantial question of law. Thus, not entertained. 4. Regarding question (D) : (a) The respondent assessee paid to its Associated Enterprises (AE), technical know how royalty of 2%. The Transfer Pricing Officer (TPO) by order dated 24th March, 2005 restricted the technical know how royalty paid by the respondent assessee to its AE at 1% instead of 2%, as claimed. In terms of the determination dated 24th March, 2005 of the TPO on the above issue amongst others, an assessment order dated 28th March, 2005 for the subject Assessment Year was passed by Assessing Officer under Section 143(3) of the Act. (b) Being aggrieved with the order dated 28th March, 2005 of the Assessing Officer, the respondent assessee preferred an appeal to the Commissioner of Income Tax (Appeals) [CIT(A)]. By an order dated 22nd March, 2007, the appeal of the respondent assessee on the issue of royalty payable on technical know how, allowed the appeal. It inter alia held that restricting the royalty paid on account of technical know how to 1% was arbitrary and adhoc. Inasmuch as, there were no reasons justifying the restriction of the technica....
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....or the reasons that the agreement for brand usage royalty was executed by the respondent assessee only on 14th March, 2002. The respondent assessee responded to the notice pointing out that it was agreed between the parties that the royalty would be paid to the AE by the respondent assessee w.e.f. 1st July, 2001. A draft agreement was thereafter prepared and presented to the Reserve Bank of India (RBI) on 10th August, 2001 for its approval. The approval was granted in November, 2001 and agreement was finally signed on 14th March, 2002. In terms of the said agreement as executed (similar to draft agreement), the royalty had to be paid w.e.f. 1st July, 2001. However, the CIT(A) was not satisfied with the explanation. This was more particularly in the absence of the minutes of the board meeting of the respondent assessee recording its decision to make the payment of brand usage royalty at 1% w.e.f. 1st July, 2001 being produced. Consequently, by the order dated 22nd March, 2007, the CIT(A) held that the royalty payment for the period 1st July, 2001 till 14th March, 2002 (date of agreement) cannot be allowed as an expenditure. (c) Being aggrieved, the respondent assessee carried the....
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....al to the CIT(A). By an order dated 22nd March 2007, the CIT(A) held that the fees paid for legal advice / consultation / assistance / representation to a professional advocates firm, cannot by itself be considered to be excessive as there is no standard rate of fees charged by Advocates firm available. The fees would differ depending upon the nature of the services, the complexity of the issues involved and the time available with the advocate concerned. In the above view, it would be impossible for the respondent assessee to furnish comparables. The CIT(A) held that onus in such a situation would necessarily be upon the Revenue to establish that the payment was excessive. As the Revenue not been able to discharge its above onus, the appeal of the respondent assessee was allowed. (c) Being aggrieved, the Revenue carried the issue in further appeal to the Tribunal. By the impugned order, the Tribunal upheld the order of the CIT(A). It held that the onus to establish that payments made to advocates in consideration for legal representation / assistance / advice is excessive, would be upon the Revenue. The impugned order also relied upon an earlier order passed by it in the case o....
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.... establish that the payment made to the Advocates for professional services was excessive. In the circumstances, no fault can be found with the orders of the CIT(A) and the Tribunal. (e) Therefore, the question as proposed does not give rise to any substantial question of law. Thus, not entertained. 7. Regarding question (G) : (a) It is an agreed position between the parties that the issue raised herein stands covered against the Revenue and in favour of the respondent assessee by the decision of this Court in Commissioner of Income Tax Vs. Johnson & Johnson Ltd. (Income Tax Appeal No.2441 of 2013) decided on 4th July, 2016 in respect of A.Y. 2001-02 raising an identical issue as raised herein. This was for the reason that the issue of treatment to be given to club fees is settled by an earlier decision of this Court in Commissioner of Income Tax Vs. Otis Elevators (I) Ltd. 194 ITR 682. (b) In the above view, the question as formulated stands concluded against the Revenue by the decision of this Court in Otis Elevators (I) Ltd. (supra), no substantial question of law arises for our consideration. Thus, not entertained. 8. Regarding question (H) : (a) The impugned ....