TaxTMI 
TaxTMI 
2016 (9) TMI 1600
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....peal treating the logo charges as revenue in nature. 3. The Brief facts of the case are that the ld. Assessing Officer did not accept the contention of the assessee that the logo charge was of revenue in nature and observed that the intention of the Legislature to treat such expenditure as capital in nature was evident from the introduction 25% depreciation on intangible assts such as technical know-how, patents, copyrights, trademarks, licences, franchise and business/ commercial rights of similar nature acquired after 01.04.1998. The ld. Assessing Officer further observed that the assessee company by utilizing the strong image and awareness in the minds of public created by the monogram 'ttk' would create an identity of its own....
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....d facts are that vide agreement in question, the assessee had agreed to pay another entity vide agreement dated 31.3.00/6.5.00 for using themonogram, namely "ttk". The relevant extract of the said agreement as available in the paper book reads as under:- "WHEREAS TTK has been in the business of various consumer andpharmaceuticals products and has been marketing and distributing the consumer and pharmaceuticals products for over five decades and has earned a wide reputation and has created a strong image and awareness on the minds of public and has also evolved an original artistic work in the form of a monogram entitled 'ttk' (hereinafter referred to as the said monogram) which has established an identity of its own in the public m....
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....by confirms having licensed and permitted the use of the said monogram by TTK-LIG for a period of three years with effect from 1st April 2000, as per approval accorded by the Government of India vide letter No.2/M-7964 dated 3rd May, 2000. Copy of Government approval is annexed to this Agreement. 2. The License and permission granted by TTK in favour of TTK-LIG as aforesaid, shall entitle TTK-LIG, so long as this agreement in force, to use the said monogram on or in relation to the goods of TTK-LIG and in relation to the business activities of TTK-LIG, including the use of the said monogram on stationery, trade literature, packing of goods, labels, wrappers and advertisements of TTL-LIG. TTK-LIG shall not under any circumstances tr....
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....undersigned by the Government of India under section 637 of the Companies Act, 1956 in Notification No.GSR 563 E dated 19.08.93,I, the Regional Director, Department of Company Affairs, Chenai-6, do hereby approve under proviso to sub section (1) of section 297 of the Companies Act, for entering into contract with M/s.T.T.Krishnamachari & Co. for licensing use of trade name and logo thereof in consideration of payment of 2%license fee calculated on the total sales of the company for a period of 3 years with effect from 1.4.2000. 2. The approval accorded in para 1 above is subject to the following conditions: (i) The contract shall be for a period of 3 years with effect from 1.4.2000 to 31.3.2003. (ii) The total val....
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....n the net sales of the assessee and at no point of time was the assessee entitled to become the exclusive owner of the knowhow and trade mark. Hence, the expenditure incurred by the assessee as royalty was revenue expenditure and was deductible under section 37(1) of the Incometax Act, 1961." 20.1. Similarly, the Co-ordinate Bench of Delhi ITAT in the case of DCM Benetton(supra) has also held usage of such brand name etc. to be revenue expenditure by observing as follows:- "From the agreement it is clear that the assessee was only granted non-assignable licence, right and privilege with reference to the licensed marks to manufacture on the mark and distribute the licensed product in India and to use the expression 'Be....