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2013 (4) TMI 998
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....nces of the case, the learned CIT(A) has erred both on facts & in law, in confirming the disallowance of sum of Rs. 3,98,64,546/- being the expenditure incurred during the year on account of royalty. (ii) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law, in holding that since the royalty despite being linked to sale, being payable only for a limited period, becomes a capital expenditure. (iii) That the above-said disallowance has been made despite the fact the royalty has been paid in respect of goods sold in domestic market and the amount of royalty pertains to & is necessarily an expense incurred to earn sales revenue during the year & hence a revenue expenditure. 3....
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....sum and substance an overall consideration of the terms and clauses in the agreement between the assessee and the Carraro SpA, Italy, it is difficult to accept the contention of the A.O. that assessee has been granted absolute right of the use of the technology. While granting the limited right of technology with putting lot of restrictions the payment of the royalty is linked to the net sale turnover of the assessee in the specified territory. It is pertinent to note that royalty payment made by the assessee is not a lumpsum payment but it is spread over from the A.Ys. 2002-03 to 2008-09 (as per the chart filed before us) which was clearly linked to the sales of the licensed product. We have also anxiously perused the decisions relied on d....