The ACIT, Ahmedabad Circle-1,, Ahmedabad v. Arvind Fashion Ltd.,, Ahmedabad

ITA 3074/AHD/2010 | 2005-2006
Pronouncement Date: 29-07-2011 | Result: Dismissed

Appeal Details

RSA Number 307420514 RSA 2010
Assessee PAN AABCA2402L
Bench Ahmedabad
Appeal Number ITA 3074/AHD/2010
Duration Of Justice 8 month(s) 13 day(s)
Appellant The ACIT, Ahmedabad Circle-1,, Ahmedabad
Respondent Arvind Fashion Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 29-07-2011
Date Of Final Hearing 29-07-2011
Next Hearing Date 29-07-2011
Assessment Year 2005-2006
Appeal Filed On 16-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HONBL E SHRI A.K.GARODIA A.M.) I.T.A. NO. 3074/AHD./2010 ASSESSMENT YEAR : 2005-2006 A.C.I.T. CIRCLE-1 ABAD VS- ARVIND FASHIONS PVT. LTD. ABAD (PAN : AABCA 2402L) (APPELLANT) (RE SPONDENT) APPELLANT BY : SHRI B.L.YADAV D.R. RESPONDENT BY : SHRI P.M.MEHTA A.R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 16-09-2010 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-VI AHM EDABAD DELETING THE ADDITION OF RS.70 23 784/- ON ACCOUNT OF ROYALTY PAYMENT (1/ 4 TH OF RS.2 73 93 549/-) CONSIDERED TO BE CAPITAL NATURE FOR THE ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED THE FACTS ARE THAT IN THE ASSESS MENT YEAR UNDER APPEAL THE AO MADE AN ADDITION OF RS.70 23 784/- ON ACCOUNT ROYAL TY PAYMENT (1/4 TH OF RS.2 73 93 549/-) CONSIDERED TO BE CAPITAL NATURE. 3. ON APPEAL IN THE IMPUGNED ORDER THE LD. CIT(A) DELETED THE ADDITION MADE BY THE AO FOLLOWING THE DECISION OF THE ITAT DATED 18 .12.2009 IN ASSESSEES OWN CASE IN ITA NO.1037/A/2005 FOR THE ASSESSMENT YEAR 2001- 02. THE RELEVANT DISCUSSION IS CONTAINED IN PARA 2.3 OF THE IMPUGNED ORDER OF THE LD. CIT(A) WHICH IS EXTRACTED BELOW: 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE ASSES SMENT ORDER AND APPELLANT'S SUBMISSION. ISSUE HAS BEEN DECIDED BY ITAT. AHMEDAB AD BY ORDER DATED DECEMBER 18 2009. IN PARA-21 OF THE SAID ORDER IT AT HELD AS UNDER- ITA NO.3074/AHD/2010 2 'IN THE ABOVE FACTS AND CIRCUMSTANCES IT IS NOT PO SSIBLE TO AGREE WITH THE VIEW OF THE REVENUE THAT BY VIRTUE OF UTILIZING THE FACILITIES AS PER THE TECHNICAL AGREEMENT FOR A PERIOD OF FOUR YEARS THE ASSESSEE COMPANY HAS ACQUIRED A BENEFIT OF ENDURING NATURE. THE ASSE SSEE HAS NOT BUILT UP ANY TECHNICAL BASE OR ACQUIRED ANY INTANGIBLE ASSET FOR PERPETUAL USE. THEREFORE WE AGREE WITH THE CIT (A) THAT THERE WAS NO JUSTIFICATION FOR TREATING ONE FOURTH OF THE ROYALTY PAYMENT AS CAPIT AL EXPENDITURE. THE C.I.L (A) IS JUSTIFIED IN DELETING THE SAID PARTIAL DISALLOWANCE.' SINCE THE JURISDICTIONAL TRIBUNAL IN THE APPELLANT 'S OWN CASE HAS DECIDED THE ISSUE IN APPELLANT'S FAVOR THE BASIS ON WHICH ASSE SSING OFFICER MADE THE DISALLOWANCE DOES NOT REMAIN. RESPECTFULLY FOLLOWIN G THE DECISION OF HONORABLE ITAT AHMEDABAD THE ADDITION MADE BY THE AO IS DELE TED. 4. AT THE TIME OF HEARING BOTH SIDES HAVE CONCEDED THAT THE ONLY CONTROVERSY INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF THE ITAT IN ASSESSEES OWN CASE FOR THE ASSESSEE YEAR 2001-02 ( SUPRA ). IN SUPPORT OF THIS COPY OF THE DECISION DATED 18.12.2009 OF THE ITAT B BENCH A HMEDABAD IN ITA NO.1304/A/2005 WAS RELIED ON BY THE LD. COUNSEL. TH E RELEVANT PORTION OF THE JUDGEMENT IN ITS ENTIRETY IS REPRODUCED HEREUNDER: 13. THE ONLY GROUND RAISED BY THE REVENUE IN ITS A PPEAL IS THAT THE CIT(A) HAS ERRED IN DIRECTING THE AO TO ALLOW ROYALTY EXPENSES OF RS.49 77 894/- AS REVENUE EXPENDITURE. 14. THE ASSESSEE-COMPANY HAS PAID A ROYALTY AMOUNT OF RS.1 99 11 576/- TO M/S.WRANGLER APPAREL CORPORATION AND H.D. LEE CO. I NC. THIS PAYMENT WAS MADE FOR AVAILING THE TECHNICAL KNOW-HOW ON THE BAS IS OF RELEVANT AGREEMENT ENTERED INTO BETWEEN THE PARTIES. THE AO ON EXAMINA TION OF THE RELEVANT ARTICLES OF THE TECHNICAL KNOW-HOW AGREEMENT CAME T O A FINDING THAT THE ENTIRE PAYMENT OF RS.1 99 11 576/- CANNOT BE TREATED AS RE VENUE EXPENDITURE ELIGIBLE FOR DEDUCTION IN COMPUTING THE TAXABLE INCOME OF TH E ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR 2001- 2002. IN THE OPINION OF THE A O THE PROCUREMENT OF KNOW-HOW AND TECHNICAL EXPERTISE AS A RESULT OF THE TECHNICAL AGREEMENT HAS BESTOWED ON ASSESSEE AN AMOUNT OF ENDURING BENEFIT FOR THE PURPOSE OF ITS BUSINESS AND THEREFORE A REASONABLE PORTION OF THE PAYMENT HAS TO BE TREATED AS CAPITAL IN NATURE. ON THE BASIS OF THE ABOVE FIN DING THE AO TREATED 25% OF THE ROYALTY PAYMENT AS CAPITAL EXPENDITURE NOT ELIG IBLE FOR DEDUCTION. THIS PARTIAL DISALLOWANCE AMOUNTED TO RS.49 77 894/-. 15. WHEN THIS MATTER WAS TAKEN UP IN FIRST APPEAL THE CIT(A) EXAMINED THE ISSUE IN A DETAILED MANNER. HE ALSO CONSIDERED THE JUDICIAL PRONOUNCEMENTS RELIED ON BY THE ASSESSING AUTHORITY AS WELL AS THO SE DECISIONS RELIED ON BY THE ITA NO.3074/AHD/2010 3 ASSESSEE. FINALLY HE CAME TO A CONCLUSION THAT THE ENTIRE PAYMENT MADE BY THE ASSESSEE TO M/S.H.D.LEE CO. INC. AND WRANGLER APPAR EL CORPORATION WAS IN THE NATURE OF REVENUE EXPENDITURE ALLOWABLE AS DEDU CTION UNDER SECTION 37(1) OF THE INCOME TAX ACT 1961. ACCORDINGLY HE DELETE D THE DISALLOWANCE OF RS.49 77 894/-. THE REVENUE IS AGGRIEVED AND THEREF ORE THE APPEAL BEFORE US. 16. THE LEARNED COMMISSIONER APPEARING FOR THE RE VENUE HEAVILY RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CA SE OF SOUTHERN SWITCHGEAR LTD. 232 ITR 359 WHERE THE HONBLE COURT UPHELD TH E DISALLOWANCE OF A PORTION OF TECHNICAL AIDE FEE AND ROYALTY PAID BY T HE ASSESSEE AGAINST THE AMOUNT OF TECHNICAL AIDE FOR SETTING UP FACTORY AND RIGHT TO SELL PRODUCTS. THE LEARNED COMMISSIONER HAS ALSO REFERRED TO THE VARIO US DECISIONS RELIED ON BY THE ASSESSING AUTHORITY IN TRANSFORMER & SWITCHGEAR LTD. VS. CIT 103 ITR 352 FENNER WOODROFFE & CO. LTD. VS. CIT 102 ITR 6 65 AND M.R.ELECTRONIC COMPONENTS LTD. VS. CIT 136 ITR 305 ETC. 17. THE LEARNED COMMISSIONER EXPLAINED THAT EVEN TH OUGH THE TECHNICAL AGREEMENT STIPULATES THAT THE ASSESSEE HAS TO RETUR N ALL THE TECHNICAL MATERIALS PROVIDED BY THE H.D.LEE CO. INC. KNOWLEDGE AND EXP ERTISE ACQUIRED BY THE ASSESSEE COMPANY IN THE COURSE OF UTILIZING THESE T ECHNICAL MATERIALS ARE IN THE NATURE OF AN INTANGIBLE ASSET HAVING VALUE OF ENDUR ANCE AND IN SUCH CIRCUMSTANCES A PARTIAL DISALLOWANCE MADE BY THE A SSESSING AUTHORITY WAS ONLY LEGITIMATE. 18. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE O THER HAND RELIED ON THE 237 ITR 280 (GUJ). THE LEARNED COUNSEL POINTED OUT THAT IN THE SAID CASE THE PAYMENT WAS MADE AS A PERCENTAGE OF THE SALES TURNO VER OF THE ASSESSEE- COMPANY AND IN SUCH CIRCUMSTANCES THE COURT HELD T HAT THE PAYMENT WAS IN THE NATURE OF REVENUE EXPENDITURE AND THEREFORE ENTITLE D TO BE DEDUCTED IN COMPUTING THE TAXABLE INCOME. THE LEARNED COUNSEL E XPLAINED THAT IN THE PRESENT CASE ALSO THE ASSESSEE WAS PAYING ROYALTY A S A PERCENTAGE OF THE SALES TURNOVER. THE LEARNED COUNSEL FURTHER EXPLAINED THA T THE TECHNICAL AGREEMENT EXECUTED IN THE PRESENT CASE WAS ONLY FOR A SHORT P ERIOD OF FOUR YEARS OUT OF WHICH THE ASSESSEE HAD NO OCCASION TO PROCURE ANY T ECHNICAL EXPERTISE TO BE TREATED AS A BENEFIT OF ENDURING NATURE. HE EXPLAIN ED THAT THE ASSESSEE- COMPANY WAS BOUND TO RETURN ALL THE TECHNICAL MATER IALS TO THE FOREIGN COLLABORATORS AFTER THE EXPIRY OF THE AGREEMENT AND THE ASSESSEE DID NOT HAVE ANY RIGHT WHATSOEVER EITHER IN THE TECHNOLOGY OR PA TENT OF THE COLLABORATOR OR IN THE TRADE MARK OR WHATSOEVER. IN SUCH CIRCUMSTAN CES THE ASSISTANCE OBTAINED FROM THE FOREIGN COLLABORATOR WAS ONLY A N ECESSARY INGREDIENT FOR RUNNING OF THE BUSINESS IN THE ORDINARY COURSE AND DOES NOT PARTAKE THE CHARACTER OF ACQUIRING ANY INTANGIBLE ASSET FOR FUT URE EXPLOITATION. 19. WE CONSIDERED THE MATTER IN DETAIL. A SALIENT F EATURE OF THE TECHNICAL AGREEMENT WAS THAT THE ROYALTY PAYMENT WAS TO BE WO RKED OUT AS PERCENTAGE OF SALES TURNOVER OF THE ASSESSEE-COMPANY. THE PERIOD OF AGREEMENT WAS FOUR ITA NO.3074/AHD/2010 4 YEARS; ALL THE TECHNICAL DETAILS AND MATERIALS HAVE TO BE RETURNED TO THE FOREIGN COLLABORATORS AFTER EXPIRY OF FOUR YEARS; THE ASSES SEE SURRENDERS ALL RIGHTS OF EVERY SORT ARISING OUT OF THE TECHNICAL AGREEMENT O N EXPIRY OF THE AGREEMENT PERIOD AND ASSESSEE DOES NOT HAVE ANY RIGHT EITHER IN THE MANUFACTURING TECHNOLOGY OR PROCESS TECHNIQUES OR OTHER TECHNICAL ASPECTS OR ANY MARKETING FACILITIES LIKE TRADE MARK PATENT ETC. 20. WHEN THE NATURE OF THE PAYMENT WAS EXAMINED IN THE LIGHT OF THE ABOVE PARAMETERS OF THE TECHNICAL AGREEMENT IT IS CLEAR THAT THE ASSESSEE HAS NOT ACQUIRED ANY EXPLOITABLE ASSET IN THE NATURE OF TEC HNICAL KNOW OR MANUFACTURING PROCEDURE OR BY WAY OF PATENT OR TRAD E MARK. AFTER THE EXPIRY OF THE PERIOD OF THE AGREEMENT THE ASSESSEE HAS NO RI GHT TO RELY ON THE TECHNICAL RESOURCES AVAILABLE WITH THE FOREIGN COLLABORATORS. IF AT ALL THE ASSESSEE- COMPANY HAS ACQUIRED ANY EXPERTISE OR KNOWLEDGE IN ITS BUSINESS PROCESS AS A RESULT OF THE DEPLOYMENT OF THE AGREEMENT THAT KNO WLEDGE/EXPERTISE AMOUNTS ONLY TO A WORKING EXPERIENCE AND DOES NOT AMOUNT TO AN ASSET OR EXPERTISE CAPABLE OF FUTURE EXPLOITATION. IT IS VERY PERTINEN T TO NOTE THAT THE PAYMENT OF ROYALTY RELATED TO THE TURNOVER ACHIEVED BY THE ASS ESSEE FROM YEAR TO YEAR. IT DIRECTLY BRINGS HOME THE POINT THAT THE SERVICES OB TAINED BY THE ASSESSEE WERE IN THE NATURE OF FACILITIES FOR RUNNING THE BUSINES S IN THE ORDINARY COURSE AND NOT IN FOR OBTAINING ANY FUNDAMENTAL TECHNICAL FACI LITY. THE FACILITY OBTAINED BY THE ASSESSEE FROM THE TECHNICAL AGREEMENT WAS IN FA CT TO HELP THE ASSESSEE TO RUN ITS BUSINESS IN A MORE COMPETENT MANNER. THEREF ORE IT IS TO BE SEEN THAT THE ROYALTY PAID BY THE ASSESSEE WAS IN THE NATURE OF E XPENDITURE INCURRED FOR RUNNING AN EXISTING BUSINESS IN A BETTER WAY. 21. IN THE ABOVE FACTS AND CIRCUMSTANCES IT IS NOT POSSIBLE TO AGREE WITH THE VIEW OF THE REVENUE THAT BY VIRTUE OF UTILIZING THE FACILITY AS PER THE TECHNICAL AGREEMENT FOR A PERIOD OF FOUR YEARS THE ASSESSEE COMPANY HAS ACQUIRED A BENEFIT OF ENDURING NATURE. THE ASSESSEE HAS NOT BU ILT UP ANY TECHNICAL BASE OR ACQUIRED ANY INTANGIBLE ASSET OF PERPETUAL USE. THE REFORE WE AGREE WITH THE CIT(A) THAT THERE WAS NO JUSTIFICATION FOR TREATING 1/4TH OF THE ROYALTY PAYMENT AS CAPITAL EXPENDITURE. THE CIT(A) IS JUSTIFIED IN DELETING THE SAID PARTIAL DISALLOWANCE. 22. ANOTHER ASPECT TO BE CONSIDERED IN THIS CONTEXT IS THAT THE AO HAS NOT TAKEN SERIOUSLY THE ARGUMENTS OF THE ASSESSEE THAT THE NA TURE OF ROYALTY PAYMENT MADE BY THE ASSESSEE WAS EXAMINED BY THE ASSESSING AUTHORITY FOR THE EARLIER ASSESSMENT YEAR 1995-96 IN A DETAILED MANNER AND AC CEPTED THE CONTENTION OF THE ASSESSEE THAT THE PAYMENT WAS IN THE NATURE OF REVENUE EXPENDITURE. THIS FINDING ARRIVED AT BY THE ASSESSING AUTHORITY FOR T HE EARLIER ASSESSMENT YEAR 1995-96 HAS SINCE THEN BEEN FOLLOWED IN ALL THE SUB SEQUENT ASSESSMENT YEARS AND THEREFORE WITHOUT ANY CHANGE IN THE FACTS OF TH E CASE THERE WAS NO PROVOCATION TO TAKE A DIFFERENT VIEW FOR THE IMPUGN ED ASSESSMENT YEAR 2001- 2002. THE CONTENTION OF THE ASSESSEE-COMPANY WAS TU RNED DOWN BY THE ASSESSING AUTHORITY STATING THAT RES JUDICATA DOES NOT APPLY TO TAX MATTERS. ITA NO.3074/AHD/2010 5 23. THERE IS NO DOUBT REGARDING THE RULE OF RES JUD ICATA IN TAX MATTERS. HONBLE SUPREME COURT IN THE CASE OF WILLY SLANY VS . STATE OF MADHYA PRADESH 1995 (2) SCR 1140 HAS HELD THAT THERE IS N O SUCH FACT AS A JUDICIAL PRECEDENCE ON THE FACTS THAT COUNSEL AND EVEN JUDGE S ARE SOMETIMES PRONE TO ARGUE AND TO ACT AS IF THERE WERE. THE HONBLE KERA LA HIGH COURT IN THE CASE OF CIT VS. KALPATTA ESTATE LTD. 211 ITR 635 HAS HE LD THAT RES JUDICATA DOES NOT APPLY TO TAX ASSESSMENT PROCEEDINGS AND DIFFERENT V IEWS ARE POSSIBLE IN THE ASSESSMENTS OF DIFFERENT ASSESSMENT YEARS IF MATER IALS ARE AVAILABLE OR MORE CLOSURE AND MORE INTELLIGENT ANALYSIS IS MADE. THER EFORE THERE IS NO DOUBT THAT THE RULE OF RES JUDICATA AS SUCH HAS NO APPLICATIO N TO INCOME TAX PROCEEDINGS. WE AGREE WITH THE AO ON THAT ESTABLISHED PROPOSITIO N OF LAW. 24. BUT IT IS ALSO NECESSARY TO REMEMBER THAT NON-A PPLICABILITY OF THE RULE OF RES JUDICATA IN INCOME-TAX MATTERS SHOULD NOT UNNEC ESSARILY DISTURB THE ESTABLISHED RULE OF CONSISTENCY TO BE FOLLOWED ON F ACTUAL MATTERS REPEATED FROM ASSESSMENT YEAR TO ASSESSMENT YEAR. 25. HONBLE SUPREME COURT IN THE CASE OF UNION OF I NDIA AND ANR. VS. KAUMUDINI NARAYAN DALAL AND ANOTHER HAS CONSIDERED THE RELEVANCE OF THE RULE OF CONSISTENCY IN MATTERS OF INCOME TAX ASSESS MENT. THE SUPREME COURT HAS HELD IN THE SAID CASE THAT IT WAS NOT OPEN TO R EVENUE TO ACCEPT THE EARLIER JUDGMENT IN THE CASE OF ONE ASSESSEE AND CHALLENGE ITS CORRECTNESS WITHOUT JUST CAUSE IN THE CASE OF OTHER ASSESSEE. AGAIN THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. NARENDRA DOSHI 254 ITR 606 HAS UPH ELD THE RULE OF CONSISTENCY WHILE DECIDING THE TAX MATTERS. THE VIE W WAS AGAIN REITERATED BY THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. N IRMA PVT. LTD. 257 ITR 57. 26. WHEN WE ARE IN BETWEEN THE RULE OF RES JUDICATA AND RULE OF CONSISTENCY IT IS NECESSARY TO EXAMINE WHETHER THE RULE OF CONS ISTENCY IS FOLLOWED FAIRLY AND AT THE SAME TIME THE RULE OF CONSISTENCY IS BLI NDLY APPLIED IN BLATANT VIOLATION OF RULE OF RES JUDICATA. WE HAVE TO READ DOWN THE RULE IN SUCH A MANNER THAT THE FINDINGS ARE NOT DISTURBED UNLESS T HERE ARE DEMANDING CIRCUMSTANCES AND EARLIER DECISIONS ARE NOT THRUST UPON WITHOUT EXAMINING THE FACTUAL MATRIX OF SUBSEQUENT ASSESSMENT YEARS. IN T HE PRESENT CASE THE ISSUE OF PAYMENT OF ROYALTY HAS BEEN SCRUTINIZED AND EXAMINE D BY THE ASSESSING AUTHORITY FOR THE EARLIER ASSESSMENT YEAR 1995-96 I N A DETAILED MANNER AND HAD COME TO A FINDING THAT THE PAYMENT WAS IN THE NATUR E OF REVENUE EXPENDITURE. THIS FINDING ARRIVED AT AFTER SUFFICIENT EXAMINATIO N OF THE FACTS OF THE CASE INCLUDING THE TERMS OF TECHNICAL AGREEMENT HAS BEEN FOLLOWED BY THE REVENUE CONSISTENTLY FOR THE SUCCEEDING ASSESSMENT YEARS AS WELL. THE POSITION BEING SO IF THE ASSESSING AUTHORITY HAS TO TAKE A DIFFERENT VIEW ON THE SUBJECT FOR THE IMPUGNED ASSESSMENT YEAR 2001-2002 IT IS ALWAYS NE CESSARY THAT THE AO SHOULD DEMONSTRATE THE COMPELLING CIRCUMSTANCES OF FACTS WHICH WOULD JUSTIFY THE DEVIATION FROM THE EARLIER FINDING. THE AO SHOU LD HAVE POINTED OUT THAT CERTAIN PERTINENT CLAUSES IN THE AGREEMENT WERE OVE RLOOKED BY THE EARLIER ITA NO.3074/AHD/2010 6 AUTHORITIES OR SUBSEQUENT DEVELOPMENTS HAVE MADE OU T A CASE AGAINST FOLLOWING THE EARLIER DECISION. A MERE REVIEW IS NOT POSSIBLE . THE RE-READING OF TECHNICAL AGREEMENT AND UNDERSTANDING THE TERMS OF AGREEMENT IN THE MANNER OF OPINION ARE NOT PROVOCATIVE REASONS TO DEVIATE FROM THE EAR LIER FINDING AND TO CUT OFF THE CHORD OF CONSISTENCY RUNNING THROUGH THE ASSESS MENT FOR SO MANY YEARS. THE CHORD OF CONSISTENCY CAN BE CUT OFF ONLY IF THE FACTS ARE SUBSTANTIALLY DIFFERENT FROM THE EARLIER ASSESSMENT YEARS CAPABL E OF LEADING TO A DIFFERENT FINDING. 27. IT IS OUR CONSIDERED VIEW THAT THE ASSESSING AUTHORITY HAS ERRED IN OVERLOOKING THE FINDING ARRIVED AT ON THE SAME SUBJ ECT FOR THE EARLIER ASSESSMENT YEARS AS THERE ARE NO DEMANDING CIRCUMST ANCES FOR A DEVIATION. ON THIS GROUND ITSELF THE DISALLOWANCE MADE BY THE AS SESSING AUTHORITY HAS TO BE HELD UNLAWFUL. 4.1 WE ARE THEREFORE OF THE VIEW THAT THE LD. CIT (A) IS LEGALLY AND FACTUALLY CORRECT IN FOLLOWING THE AFORESAID DECISION AND DEL ETING THE ADDITION OF RS. 70 23 784/- ON ACCOUNT OF ROYALTY PAYMENT (1/4 TH OF RS.2 73 93 549/-) BY CONSIDERING IT TO BE REVENUE IN NATURE. HENCE WE INCLINE TO UPHOLD THE ORDER OF THE LD. CIT(A). RESULTANTLY THE APPEAL OF THE REVENUE IS DISMISSED . 5. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 29.07.2011 SD/- SD/- (A.K.GARODIA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29/07/2011 COPY OF THE ORDER IS FORWARDED TO:- (1) THE ASSESSEE (2) THE DEPARTMENT. (3) CIT (A.) CONCERNED. (4) CIT CONCERNED. (5) D.R. ITAT AHMEDABAD TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT AH MEDABAD. TALUKDAR/ SR. P.S.