TaxTMI 
TaxTMI 
2025 (2) TMI 190
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....r of Hon'ble CIT(A) is bad, both in law and on facts. 2. That the Hon'ble CIT(A) had erred in upholding royalty payment of Rs. 19,94,078 paid by the appellant to 'Choice Hotels Licensing BV' for grant of franchisee rights and use of brand name as capital expenditure without properly appreciating the facts of the case, cases as relied upon & provisions of the Act. All the above grounds of appeal are without prejudice and notwithstanding each other. The Appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal. Any consequent relief, to which the Appellant may be entitled under the law in p....
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....ought for dismissal of the Appeal. 6. Heard and perused the material. The only ground urged by the Assessee in the present Appeal is regarding disallowance of royalty payment of Rs. 19,94,078 paid by the Assessee to Choice Hotels BV licensing for grant of franchisee rights and use of brand name. The similar disallowance has been made for the Assessment Year 2014-15 as well and the Co-ordinate Bench of the Tribunal in Assessee's own case for Assessment Year 2014-15 in ITA No. 7575/Del/2018 held as under:- "9. From the above clauses, the ld. CIT(A) held that it can be seen that Choice B.V., under the agreement, had to provide the operation manual and rules. The operation manuals and rules are, in fact, technical knowhow for runnin....
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....s Support, Quality Assurance Inspections, Financial Planning. The Appellant receives fees from Hotel properties in the name of franchisee fees, marketing fees, management operation fees etc." 11. Based on the above, the ld. CIT(A) held that the Assessee is no t engaged in manufacturing business, the business of the Assessee is running the hotel. Hence, the technical know-how, project planning etc. are related to the knowhow of the running the hotel business and building it. The ld. CIT(A) held that the technical know-how acquired by the Assessee cannot be limited to its use for one financial year only. The ld. CIT(A) held that the assessee has got enduring benefit to the recipient of the technical know-how. 12. The ld. CIT....
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....t is paid for the purpose of "franchise to operate and maintain hotels in an assigned territory and use its brands such as Quality, Com fort, Sleep inn, Cambria suits." It is a fact that payment of royalty to Choice B. V. was for the use of brand name or trademark. The Assessee accepted non-exclusive right and obligation to operate the franchise and to maintain the franchised hotel in the territory, subject to the terms & conditions mentioned in the agreement. 15. In the case of Janas Wood head& Sons (India) Ltd. , the High Court had come to the conclusion that the business setup by the Assessee was a new business and the foreign firm had ITA No. 7575/Del/2018 Choice Hospitality (India) Pvt. Ltd. 8 not only furnished information an....