Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
Open DEMAT Account with in 24 Hrs and start investing now!
ITAT-Constitution of Benches »
Open DEMAT Account in 24 hrs
 20 LPA Opening Hiring Qualified CA For Assurance Manager Profile
 Non-Filing of Income Tax Return amounts to Escapement of Income: ITAT upholds Reassessment u/s 147
 Non Appreciation of facts in true perspective: ITAT sets aside Revision Order
 No Evidence of Tax Evasion by showing Fictitious or False Transactions: ITAT deletes Addition of Expenditure u/s 40A(3)
 Earning Interest Income from Inter-Corporate Deposit is Business Income: ITAT
 Income Tax Penalty u/s 271E cannot be levied in the absence of Regular Assessment: ITAT
 ITAT deletes Addition u/s 68 of Income Tax Act Firm not Taxable for Capital introduced by Partner
 Payment for Facebook Ads and Other Digital Advertising Companies not subject to TDS as per DTAA: ITAT
 No Service Tax Leviable on Goods component of Composite Works Contract as VAT has been paid: CESTAT
 ITAT deletes Addition on Account of Investment made from Undisclosed Sources as all Transactions were made through Banking Channels
 Relief to Honda: ITAT directs AO to delete Addition on account of Capitalisation of Royalty Expenses by Holding it to be Revenue in Nature
 Minimising tax liabilities by lawful means not illegal, says ITAT
 Interest paid on Late Payment of Service Tax is a Deductible Business Expenditure: ITAT
 ITAT upholds Addition on Account of Unaccounted Cash as no mention of Agricultural Land on Translated Document

Relief to Honda: ITAT directs AO to delete Addition on account of Capitalisation of Royalty Expenses by Holding it to be Revenue in Nature
November, 11th 2021

In a major relief to Honda Motorcycle and Scooter India Pvt. Ltd, the Delhi Bench of Income Tax Appellate Tribunal (ITAT) directed the AO to delete Addition on account of capitalisation of royalty expenses by holding it to be revenue in nature.

The Assessee is a subsidiary of Honda Motor Co Ltd Japan, engaged in the business of manufacture and sale of motorcycles and Scooters. The assessee has entered into certain international transactions with its associated enterprise and therefore reference was made to the transfer pricing officer to determine the arm’s-length price in respect of international transactions undertaken by the assessee.


The assessee has raised the issue in respect of capitalization of the royalty expenses paid to him the amount of Japan wherein the assessee has paid a royalty expenditure of Rs 8,488,135,369/– in lieu of granting license Under the royalty and technical knowhow agreement and INR Rs 2,331,540,470/– in lieu of granting technical guidance Under the technical know-how agreement. The assessee has claimed that it did not acquire any new asset or any new enduring benefit from the payment made Under the agreement.

The Coram of Judicial Member, Amit Shukla and Accountant Member, Prashant Maharishi noted that the assessee was already engaged in the manufacturing of motorcycle and Scooter and payment of royalty expenses was not with respect to setting up of manufacturing facility.

The ITAT found that find that this issue is squarely covered in favour of the assessee by the decision of the coordinate bench in assessee’s own case for the assessment year 2015 -16 and directed the AO to delete the addition of Rs. 1,591,781,250/– on account of capitalization of royalty expenses holding it to be revenue in nature.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2023 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting