TaxTMI 
TaxTMI 
2025 (6) TMI 238
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.... by the Revenue in all these appeals is relating to allowability of expenditure of license fee paid to the assessee. 3. At the time of the hearing, learned Counsel appearing for the assessee submitted before us that this issue is squarely covered by the order passed by the Hon'ble ITAT as well as confirmed by the Hon'ble Jurisdictional High Court vide judgment dated 31st January, 2025 in ITA No.199/2017 for assessment year 2009-10, copy whereof has already been submitted before us. Such submission made by the learned AR has not been controverted by the learned DR with all her fairness. 4. We have heard the respective parties and also perused the relevant documents placed before us including the order passed by the authorities belo....
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....8. We find ourselves unable to sustain that contention since, in our considered opinion, it is the principal purpose test which would be determinative of whether the expenditure was one which could have been disallowed. As noticed in the previous parts of this judgment, while examining the reach of the Explanation to Section 37, it would have to be found as a matter of fact that the expenditure was incurred for the commission of an offense as known in law or for a purpose prohibited. A breach of the Bar Council of India Rules is admittedly not classified as an offense. That then leaves us to examine whether the purpose underlying the expenditure was for a purpose prohibited by law. 29. As was rightly contended by Mr. Vohra, the pri....
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....y Dr. Sagar. 31. We then revert to the fundamental issue of whether the payment of license fee could be regarded as an expenditure incurred for a purpose prohibited by law. A payment made for use of goodwill cannot possibly be viewed as being an illegal purpose or one prohibited by law. A person would be obliged to part with consideration for the use of goodwill if it seeks to derive benefit and advantage therefrom. Undisputedly, Remfry & Sagar had acquired a reputation and goodwill in the field of legal services. What the respondent assessee thus sought to do was to derive advantage and benefit of association as also the use of a name which carried a reputation in the legal arena. The agreement to utilize and derive benefits of go....
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.... basis to compute the consideration liable to be paid for use of goodwill and the utilisation of the name. The primary purpose of referring to the total billing of the law firm was to provide a firm, definite and fixed basis to compute the consideration liable to be paid for use of goodwill. The consideration so paid is thus clearly not liable to be characterised as a sharing of revenue derived from the practise but fundamentally for the exercise of the right to exploit and derive advantage from goodwill. 35. The linking of the consideration for the aforesaid purpose to the revenue earned by the firm only constituted a basis and a measure to determine the consideration that was to be paid. The arrangement was clearly not driven by ....
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....y reason to deviate from the same and respectfully relying on the same, we find no reason to interfere with the order passed by the learned CIT(A) as impugned before us. In that result, the issue raised by the Revenue in all these appeals before us is found to be devoid of any merit and, is thus, dismissed. 6. The second issue raised by the Revenue in its appeal for assessment year 2017-18 relates to ad-hoc disallowance being 10% of the foreign travelling expenses. 7. At the time of hearing before us, learned Counsel for the assessee submitted that this issue is squarely covered by the Order of the Tribunal dated 22nd September, 2021 in ITA No.4955/Del/2018 in assessee's own for assessment year 2014-15. A copy of the said Order was pl....