1. The Commissioner of Income Tax Vs. Jubilant Foodworks Pvt. Ltd. ITA No. 310/2014, Date of Order: 01.08.2014, Delhi High Court
Whether franchise fee revenue in nature?
Held
Yes, if no new asset came into existence on account of payment of
franchise fee and the rights under the agreement were only for the
tenure of the agreement.
The
respondent-assessee had paid a lumpsum consideration of $200000, which
was capitalised and was not treated as revenue expenditure. We are not
concerned and there is no dispute raised by the Revenue on the said
payment. We are only concerned with the franchise fee fixed @ 3% of the
entire sale, i.e., the turnover of the assessee in India. The said fee
was payable in terms of franchise agreement dated 27th March, 1995 as
long as the respondent-assessee continued to utilise and use the
trademark Dominos . It was payable annually and was not a lumpsum
payment, though the last factor alone may not be determinative whether
the payment was revenue and capital.
(i)
The expenditure incurred towards initial outlay of business would be in
the nature of capital expenditure, however, if the expenditure is
incurred while the business is on going, it would have to be ascertained
if the expenditure is made for acquiring or bringing into existence an
asset or an advantage of an enduring benefit for the business, if that
be so, it will be in the nature of capital expenditure. If the
expenditure, on the other hand, is for running the business or working
it, with a view to produce profits, it would be in the nature of revenue
expenditure;
(ii)
It is the aim and object of expenditure, which would, determine its
character and not the source and manner of its payment;
(iii)
The test of once and for all payment i.e., a lump sum payment made, in
respect of, a transaction is an inconclusive test. The character of
payment can be determined by looking at what is the true nature of the
asset which is acquired and not by the fact whether it is a payment in
lump sum or in an installment.
(Please click here for judgment)
2. Sumit Devendra Rajani Vs. ACIT OSD, Special Civil Application No. 2349 of 2014, Date of Order: 23.06.2014, Gujarat High Court
TDS
credit has to be given to the payee as per TDS certificate given by
employer even if details of Form 26AS mismatch withthat or deductor is
at fault for non-deposit of TDS with Govt.
It is
held that the petitioner assessee deductee is entitled to credit of the
tax deducted at source with respect to amount of TDS for which Form
No.16A issued by the employer deductor – M/s. Amar Remedies Limited has
been produced and consequently department is directed to give credit of
tax deducted at source to the petitioner assessee – deductee to the
extent form no.16 A issued by the deductor have been issued.
Consequently, the impugned demand notice dated 6.1.2012 (Annexure D) is
quashed and set aside. However, it is clarified and observed that if the
department is of the opinion deductor has not deposited the said amount
of tax deducted at source, it will always been open for the department
to recover the same from the deductor. Rule is made absolutely to the
aforesaid extent. In the facts and circumstances.
(Please click here for judgment)
New User? 
Subscribe Now