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ACIT, Circle 12(1), New Delhi. Vs. G4S Security Services (India) Pvt. Ltd., Panchwati, 82A, Sector-18, Gurgaon.
August, 21st 2014
           IN THE INCOME TAX APPELLATE TRIBUNAL
                DELHI BENCHES : C : NEW DELHI

    BEFORE SHRI R.S. SYAL, AM AND SHRI H.S. SIDHU, JM

                       ITA No.3160/Del/2013
                     Assessment Year : 2009-10


ACIT,                            Vs.   G4S Security Services (India)
Circle 12(1),                          Pvt. Ltd.,
New Delhi.                             Panchwati,
                                       82A, Sector-18,
                                       Gurgaon.

                                       PAN : AAACG1625G

  (Appellant)                             (Respondent)


            Assessee By      :    Shri Arun Bansal, CA
            Department By    :    Shri Satpal Singh, Sr.DR


                                 ORDER



PER R.S. SYAL, AM:

     This appeal by the Revenue arises out of the order passed by

the CIT (A) on 26.02.2013 in relation to the assessment year

2009-10.
                                                       ITA No.3160/Del/2013





2.   The only effective ground is against treating royalty payment

of `8,64,67,558/- as revenue expenditure against the AO's point

of view of such amount being capital expenditure.


3.   Briefly stated, the facts of the case are that the assessee

paid, inter alia, royalty of ` 8.6 crore to its Associate enterprise

M/s G4S Regional Consultancy Services and claimed this amount

as revenue expenditure.       The AO, after considering certain

decisions, came to the conclusion that this amount was to be held

as capital expenditure. He, therefore, made addition for this sum.

The ld. CIT(A), relying on certain orders passed by the Tribunal in

identical circumstances in the assessee's group concerns, and

also the affirmation of some of such orders by the Hon'ble Delhi

High Court, decided the issue in assessee's favour. The Revenue

is   aggrieved   against   treating   such   royalty    as     revenue

expenditure.



4.   After considering the rival submissions and perusing the

relevant material on record, it is observed that the assessee paid

royalty @ 1% of the sales effected by it pursuant to an Agreement


                                 2
                                                      ITA No.3160/Del/2013


which was made on 27.12.2007. This Agreement, a copy of which

is available on record, makes it clear that its duration is five years

subject to further renewal. Clause 5.2 of the Agreement provides

that it may be terminated at any time by mutual consent of the

parties. Clause 2.1 of the Agreement makes it explicitly clear that

it grants the assessee a non-exclusive right to use the trade mark

and trade name in the licensed business.        The above features

deduced from the Agreement amply show that the character of

royalty paid by the assessee to its Associated enterprise is

nothing, but revenue.      The Tribunal in several cases of the

assessee's group concerns has held such amount to be revenue in

nature. Copies of such orders have been placed on record. The

ld. CIT(A) has recorded a categorical finding in para 5.6 of the

impugned order that the Hon'ble Delhi High Court has also

decided this issue in assessee's favour by dismissing the

Revenue's appeals for assessment years 2002-03, 2003-04 and

2005-06.    The ld. DR could not point out any distinguishing

feature from the facts of the instant case vis-a-vis the other years

decided by the Tribunal deciding the issue in the assessee's

favour. In view of the availability of so many precedents on this

                                  3
                                                           ITA No.3160/Del/2013





issue by the Tribunal in identical circumstances, we uphold the

impugned order.


5.        In the result, the appeal is dismissed.


          The order pronounced in the open court on 14.08.2014.

               Sd/-                                        Sd/-

       [H.S. SIDHU]                                     [R.S. SYAL]
     JUDICIAL MEMBER                                ACCOUNTANT MEMBER

Dated, 14th August, 2014.

dk

Copy forwarded to:

     1.   Appellant
     2.   Respondent
     3.   CIT
     4.   CIT (A)
     5.   DR, ITAT

                                                     AR, ITAT, NEW DELHI.




                                      4

 
 
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