ITAT directed AO to delete the additions made on account of capitalization of royalty expenses as they were revenue in nature

Last updated: 01 December 2021
Quick Summary
The Income Tax Appellate Tribunal (ITAT) has directed the Assessing Officer (AO) to remove additions made to Honda Motorcycle and Scooter India Pvt. Ltd.'s income. The tribunal ruled that royalty expenses paid by the company were revenue in nature, not capital. This decision was based on the finding that the payments did not result in the acquisition of a new asset or any enduring benefit for the company.

Court :
ITAT Delhi

Brief :
The Hon'ble Income Tax Appellate Tribunal, Delhi ("ITAT") in the matter of Honda Motorcycle and Scooter India Pvt. Ltd. v.  ACIT, Circle: 4 (1) New Delhi [ITA. No. 477/Del/2021 dated November 09, 2021], directed the Assessing Officer ("AO") to delete addition on account of capitalisation of royalty expenses by holding it to be revenue in nature as the assessee did not acquire any new asset or any new enduring benefit from it.

Citation :
ITA. No. 477/Del/2021 dated November 09, 2021

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Bimal Jain
Published in Income Tax
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