IN THE HIGH COURT OF DELHI AT NEW DELHI 
 . 
   ITA 232/2013  
 . 
 CIT            ..... Appellant 
 . 
 Through: Mr Kamal Sawhney, Advocate 
 . 
 . 
 . 
 versus 
 . 
 . 
 . 
 KL MALIK and SONS PVT LTD     ..... Respondent 
 . 
 Through 
 . 
 . 
 . 
 CORAM: 
 . 
 HON'BLE MR. JUSTICE BADAR DURREZ AHMED 
 . 
 HON'BLE MR. JUSTICE VIBHU BAKHRU 
 . 
 O R D E R 
 . 
    15.05.2013 
 . 
 . 
 . 
 This appeal is directed against the order dated 31.01.2012 passed 
 by the Income Tax Appellate Tribunal in ITA No.2531/DEL/2011 relating to 
 the assessment year 2006-2007.  The appeal before the Tribunal arose out 
 of an order of the Commissioner of Income Tax under Section 263 of the 
 Income Tax Act, 1961. 
 . 
 The only issue which arose for consideration was with regard to the 
 payment of royalty of ` 26,79,284/- which had been claimed by the 
 assessee as a revenue expenditure.  The Commissioner of Income Tax, on 
 examination of the assessment record, observed that the Assessing Officer 
 had allowed the expenditure of ` 26,79,284/- towards royalty and 
 copyright expenses in violation of provisions of Section 37 of the said 
 Act.  Thereafter, a show cause notice under Section 263 was issued and, 
 in response to which, the assessee submitted that the royalty had been 
 paid to the authors based on number of their books that were published 
 and sold during the year and the assessee company had not acquired any 
 copyright in those titles.  It was contended on behalf of the assessee 
 that as the assessee company had not purchased any right from the 
 authors, the payment of royalty was nothing but a revenue expenditure. 
 . 
 The Commissioner of Income Tax, however, was of the view that the 
 respondent assessee had derived an enduring benefit on account of the 
 payment made under the head ?royalty? and ?copyright expenses? and that 
 . 
 the same were not allowable as revenue expenditure under Section 37 of the said Act.  Consequently, the order of the Assessing Officer was held 
 to be erroneous and prejudicial to the interest of the revenue and, 
 therefore, the assessment order was cancelled and the matter was remitted 
 to the Assessing Officer with the direction to frame an assessment order 
 afresh after providing the assessee a reasonable opportunity of being 
 heard. 
 . 
 On an appeal by the assessee, the Tribunal held that the 
 uncontroverted facts of the case were that the royalty payments had been 
 made on the basis of sales made and had been allowed by several assessing 
 officers in the past.  The Tribunal also noted that it was not the case 
 of the revenue that the assessee had purchased any copyright during the 
 year under consideration.  The Tribunal observed that as royalty had been 
 claimed and allowed consistently by various assessing officers in the 
 past two decades, the Assessing Officer was not required to specifically 
 mention in the assessment order as to why the claim of royalty was 
 allowed. This was in the context of the fact that the Assessing Officer 
 had not mentioned anything about the royalty payments in the assessment 
 order.  The Tribunal explained this provision by stating that this was a 
 standard practice, which was going on from two decades and, therefore, 
 there was no need for the Assessing Officer to make any specific mention 
 as to why the royalty was allowed as a revenue expenditure.  This is so, 
 particularly, in view of the fact that even for the year in question, the 
 revenue?s case is not that any copyrights were acquired by the 
 respondents assessee.  Consequently, the Tribunal was of the view that by 
 virtue of the Commissioner?s order passed under Section 263 of the said 
 Act, the Assessing Officer would be unnecessarily dragged in protracted 
 litigation on a settled issue.  As a result, the Tribunal set aside the 
 order passed by the Commissioner of Income Tax dated 28.03.2011.  We do 
 not find any substantial question of law which arises for our 
 consideration in this appeal. 
 . 
 The appeal is dismissed. 
 . 
 . 
 . 
 . 
 . 
 . 
 . 
 BADAR DURREZ AHMED, J 
 . 
 . 
 . 
 . 
 . 
 . 
 . 
 VIBHU BAKHRU, J 
 . 
 MAY 15, 2013 
 . 
 MK 
 . 
 . 
 . 
 $ 3 
 .