COMMON JUDGMENT

(Judgment of the Court was delivered by R.MAHADEVAN, J.)

These tax case appeals have been filed by the appellant/Revenue, challenging the order dated 29.01.2016 passed by the Income Tax Appellate Tribunal, Chennai 'B' Bench, in I.TA.No.868/Mds/2015, I.TA.No.869/Mds/2015, I.TA.No.870/Mds/2015 and I.TA.No.871/Mds/2015. respectively, relating to the assessment years 2010-2011 and 2011-2012, by raising the following substantial questions of law:-

In TCA.Nos.886 and 892 of 2017:-

“(i) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the royalty paid by the assessee towards the use of logo of Shriram Chits and Investments P Ltd is to be treated as revenue expenditure without appreciating that as per the section 32 w.e.f. 1.4.99 the royalty is to be treated as intangible asset of capital nature and consequently the royalty payment is a capital expenditure and the assessee is entitled for depreciation only.

(ii) Whether on the facts and in the circumstances of the case the tribunal was right in holding the expenditure incurred on Employee Stock Option Scheme is allowable as revenue expenditure."

In TCA.Nos.893 and 894 of 2017:-

"Whether on the facts and in the circumstances of the case the Tribunal was right in holding that provisions of sec 14A rw Rr 8D cannot be invoked to compute the indirect expenditure of Rs.13.77 Cr for earning the exempt income, for the purpose of disallowance u/s 14A on the ground that the assessing officer had not expressively recorded a specific satisfaction that the said expenses were incurred to earn exempt income."

2. However, during the course of hearing, the learned counsel appearing for the appellant / Revenue has produced redrafted grounds / Questions of law in TCA.Nos.893 and 894 of 2017, which have been agreed to by the learned counsel appearing for the respondent / assessee and they are as follows:-

“(i) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the royalty paid by the assessee towards the use of logo of Shriram Chits and Investments P Ltd is to be treated as revenue expenditure without appreciating that as per the section 32 w.e.f. 1.4.99 the royalty is to be treated as intangible asset of capital nature and consequently the royalty payment is a capital expenditure and the assessee is entitled for depreciation only.

(ii) Whether on the facts and in the circumstances of the case the tribunal was right in holding the expenditure incurred on Employee Stock Option Scheme is allowable as revenue expenditure."

3. The learned counsel appearing for the appellant / Revenue further submitted that the substantial questions of law, raised in all these appeals are covered, by a common judgment dated 30.06.2022 passed by this court in T.C.A.No.755 of 2009 etc. batch in respect of the assessee's own case. The relevant paragraphs of the said judgment are extracted below for ready reference:

Substantial question of law No.1 - Royalty :-

“7.7. It is an admitted fact that the assessee companies had entered into licence agreement with the parent company viz., M/s.Shriram Chits & Investments Pvt. Ltd., for use of its logo, on payment of royalty based on turnover and the same is renewable. As already stated, it is the claim of the assessee companies that the license agreement confers the right to use the logo with restrictions viz., non-transferable and non-exclusive; there is no acquisition and there is only the right to use and not ownership; and therefore, the royalty payment which is revenue in nature, falls within the general provisions of section 37(1) and not under section 32(1)(ii).

7.8. This court is bound by the legal proposition laid down In the decision in CIT v. Ciba of India Ltd, (supra) referred to on the side of the assessee companies. In that case, the Hon'ble supreme court answered the question, whether the payment made by the assessee to the swiss company towards technical and research contribut