Under an agreement dated July 15, 1972 between the firm and the companypany, the firm sold its rights and assets to the companypany on the terms and companyditions set out therein.
Clause 4 a of the agreement, which alone is material for the purposes of these appeals reads For the use of the trade name the Company shall pay royalty to the Vendor at the rate of 10ps.
B. Ahuja, Ranbir Chandra and Ms. A. Subhasini for the Respondent.
From the Judgment and Order dated 10.7.1986 of the Kamataka High Court in I.T.R.C. No.
The Judgment of the Court was delivered by P. JEEVAN REDDY J. These appeals are preferred against the judgment of the Karnataka High Court answering the question referred to it, at the instance of the revenue, in favour of the revenue and against the assessee.
One of its objects was to take over business of the aforesaid firm.
In exercise of the powers companyferred on him by Section 263, the Commissioner of Income Tax initiated suo moto proceedings for revising the said assessments in so far as the aforesaid deductions were companycerned.
Prior to 15.7.1992, a partnership firm called K.M. Anand Prabhu Sons, Mangalore, companysisting of three partners K.M. Vishnudas Prabhu, K.M. Ramdas Prabhu and K.M. Shankar Prabhu was engaged inter alia in the business of manufacturing and sale of beedies under the brand name Mangalore Prakash Beedies.
for every thousand beedies sold by the Company by using the trade name of the Vendor.
v. Commr.
Salve, P.H. Parekh, Ms. Meenakshi Grover, R. Nariman, Ms. Gill and Ms. Simi Kr.
The question referred under section 256 of the Income Tax Act, 196 1, read as follows Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs.
6092 and 6092A/90 Prakash Beedies P Lid.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
The assessee was making payments to the firm every year on account of royalty in terms of said clause.
For the assessment years 1974 75 and 1975 76, the assessee claimed deduction of the amount paid by it to the firm on account of royalty in terms of clause 4 a of the agreement.
Karnataka, Bangalore .
1, 79, 742 companyld number be disallowed under section 40 c of the Income Tax Act, 1961.
The amounts paid during the accounting years relevant to the said assessment years were Rs.
4462/89, 1822, 1902, 1465/87, 675, 658, 4461/89, 6093/90, 6204/ 90, 6092.
The above question related to Assessment Year 1974 75.
The royalty fixed hereby shall number be varied for a period of one year and may be reviewed and or revised thereafter wards from time to time.
After hearing the assessee, he passed orders on September 16, 1976 whereunder he disallowed payments to the firm over and above the ceiling prescribed in Section 40 c .
WITH A. Nos.
and 6092 A of 1990.
The question referred for A.Y. 1975 76 was identical except in the matter of amount .
of Income Tax.
1452 of 1987.
for the Appellants.
3, 95, 742 respectively.
3, 16, 526 and Rs.
198 of 1987.
The I.T.O. allowed the deductions as claimed.
The three partners aforesaid of the firm were also the directors of the assessee companypany.
On May 20, 1972 a Private limited companypany called Prakash Beedies Limited the assessee appellant herein , was incorporated with its registered off ice at Manoalore.
The royalty shall be worked out at the end of each quarter ending on March, June, September and December, on the sales made during each quarter.
Since the facts in all the appeals are identical it would be sufficient to numberice the facts in C.A. Nos.
The assessee preferred appeals to the Tribunal against the orders of the I.T.O, The appeals were allowed and the orders of the I.T.O. restored.
