Commissioner Of Income Tax v. Aia Magotteaux Ltd.....opponent(S

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1395 of 2006 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ?the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME TAX....Appellant(s) Versus AIA MAGOTTEAUX LTD.....Opponent(s) ================================================================ Appearance: MR MANISH BHATT, SENIOR ADVOCATE WITH MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1 MR SN DIVATIA, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI andHONOURABLE MR.JUSTICE K.J.THAKER Date : 12/12/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. Being aggrieved and dissatisfied with the impugned order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench (hereinafter referred to as ITAT) dated 29.06.2005 in ITA No. 2352/Ahd/1999 for the Assessment Year 1996-97, the revenue has preferred the present Tax Appeal. 1.1This Court while admitting the present appeal formulated the following substantial question of law for consideration: Whether, the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) deleting the disallowance of Rs. 4,71,39,724/- made by the Assessing Officer on the ground that the said payment was not on account of royalty but on account of payment of technical know how fees covered by section 34AB of the Act? 2. The assessee firm is engaged in the business of manufacturing and selling of Alloy steel castings used in cement factories and thermo power stations. The Assessing Officer disallowed the assessee’s claim of royalty payment to two foreign parties on the ground that the expenditure was of capital nature and that the payment was for technical know how. On appeal by the assessee, the CIT (Appeals) allowed the appeal and held that payment was royalty and not fee for technical knowhow. 3. On appeal before the ITAT by the revenue, by impugned order, ITAT dismissed the appeal and confirmed the order passed by CIT(A). Being aggrieved and dissatisfied with the impugned judgment and order passed by the ITAT, the revenue has preferred the present Tax Appeal for consideration of the aforesaid substantial question of law. 4.Mr. S.N. Divatia, learned Counsel appearing on behalf of the assessee has submitted that as such the issue involved in the present Tax Appeal is now not res integra in view of the decision of this Court rendered in Tax Appeal No. 361 of 2001 on 24.11.2014wherein this Court has answered the question in favour of the assessee. This Court relying on the decision of this Court in Tax Appeal No. 326 of 2000 rendered on 03.07.2012 has answered the aforesaid question in the affirmative. 4.Mr. S.N. Divatia, learned Counsel appearing on behalf of the assessee has submitted that as such the issue involved in the present Tax Appeal is now not res integra in view of the decision of this Court rendered in Tax Appeal No. 361 of 2001 on 24.11.2014wherein this Court has answered the question in favour of the assessee. This Court relying on the decision of this Court in Tax Appeal No. 326 of 2000 rendered on 03.07.2012 has answered the aforesaid question in the affirmative. 5. We have heard Shri Bhatt, learned advocate appearing on behalf of the Department and Shri Divatia, learned advocate appearing on behalf of the assessee. A similar question came up before this Court in Tax Appeals No. 361 of 2001 as well as 326 of 2000 and this Court while deciding the said issue has held that the said expenditures were revenue in nature. We are not giving further elaborate reasons for the same as the issue has already been concluded by this Court and the question has already been answered in favour of the assessee. Even otherwise we are in complete agreement with the reasonings adopted by the Tribunal on facts also. The Tribunal has followed its own order in assessee’s own case for assessment year 1993-94 in ITA No. 128/Ahd/1997 dated 13.05.2003 and confirmed the findings of CIT(A). 6. In view of the above, we answer the question raised in the present appeal in the affirmative i.e. in favour of the assessee and against the revenue. We hold that the Tribunal was justified in confirming the order passed by the CIT(A) deleting the disallowance of Rs. 4,71,39,724/- made by the Assessing Officer on the ground that the said payment was not on account of royalty but on account of payment of technical know how fees covered by section 34AB of the Act. Consequently, the impugned order passed by the ITAT is confirmed. Accordingly, present appeal is dismissed. (K.S.JHAVERI, J.) divya (K.J.THAKER, J)