The Income Tax Appellate Tribunal (ITAT), Delhi bench ruled that agreement which goes to root of matter cannot be brushed aside lightly and directed the Assessing Officer to consider Trade Mark Licence Agreement.
The assessee company, Super Brands Ltd [UK] is incorporated under the laws of England and Wales and is in the business of publishing and printing of books which contain the write up of selected different companies. Select Indian companies and their products get advertised through the said book.
To bring out the book Super Brand in respect of Indian companies and their products, the assessee has entered into an agreement with Anmol Dar and as per the said agreement, Anmol Dar is treated as an agent of the assessee.
After considering various clauses of the agreement, the Assessing Officer formed a belief that Anmol Dar is not an independent agent acting on behalf of the assessee in normal course of his business but is economically dependent on the assessee as out of his total income. The Assessing Officer estimated 85% of the total receipts and treated balance 15% business income of the assessee as taxable at 40%.
The Counsel for the assessee stated that the assessee entered into a licence agreement with Anmol Dar, who was allowed to use the trade mark of Super Brand Limited for the purpose of carrying on the business of evaluation of brand contents, publishing and sale in India and stated that the Assessing Officer has not correctly appreciated the operations/activities undertaken by Super Brand in India.
A Division Bench consisting of Saktijit Dey, Judicial Member and N K Billaiya, Accountant Member held that “Such an agreement which goes to the root of the matter cannot be brushed aside lightly. The Assessing Officer is directed to consider the agreement dated April 04, 2013 and decide the issue afresh after giving reasonable and adequate opportunity of being heard to the assessee.”
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