Amrit Banaspati Company Pvt. Ltd. Vs DCIT (ITAT Delhi)
The case involves cross appeals filed by both the assessee and the Revenue for Assessment Years 2010–11, 2011–12, and 2012–13 against orders of the Commissioner of Income Tax (Appeals) passed under sections 143(3)/153A of the Income Tax Act.
At the outset, the assessee did not press its ground challenging the validity of the assessment order, and the same was dismissed as not pressed.
The primary issue in the assessee’s appeal related to disallowance of royalty payment amounting to Rs. 44.60 lakh on the use of a “logo.” The Assessing Officer had disallowed this expenditure, and the CIT(A) upheld the disallowance. The CIT(A) noted that while royalty paid for use of the brand was allowable based on earlier years’ decisions, the royalty claimed specifically for the logo was a new element not forming part of the original demerger scheme approved by the High Court. The CIT(A) also rejected additional evidence relating to the logo agreement on the ground that it was produced for the first time at the appellate stage and thus could not be admitted.
Upon consideration, the Tribunal observed that the CIT(A) had not identified any specific defect in the additional evidence submitted by the assessee. Instead, the disallowance was based on the view that the claim was not justifiable. The Tribunal further noted that the CIT(A) did not conclude that the expenditure was not incurred wholly and exclusively for business purposes under section 37(1). In view of these findings, the Tribunal held that the royalty payment for the logo was allowable and directed that the disallowance of Rs. 44.60 lakh be deleted.
