No S. 43B Disallowance & No Disallowance Of Royalty Paid By Brand Owner

[shobha nagrani]

Respected Profesionals,

Here are two important judgements:

No S. 43B Disallowance For Interest Payable To Non-Scheduled Banks: Upendra T. Kapadia (Bombay High Court)

Section 43B of the Act is applicable only in respect of any amount paid as interest to a scheduled bank. A scheduled bank as defined in Explanation 4 to Section 43B of the Act. The Shree Mahalaxmi Co. op. Bank Ltd. Is not mentioned in the second schedule to the Reserve Bank of India Act, 1934 nor covered by any other Banks mentioned to the Explanation to Section 11(5)(iii) of the Act. Consequently, the Tribunal was correct in its conclusion that non payment of interest amount to a co-operative bank would not attract the provisions of Section 43B of the Act

http://tax2.me/no-s-43b-disallowance-for-interest-payable-to-non-scheduled-banks-upendra-t-kapadia-bombay-high-court/

Advertisement Expenditure Of Brand Owned By Another: Khambata Family Trust (Gujarat High Court)

The assessee procured usage rights for brand "Rasna" for a valuable consideration and incurred advertisement expenses in respect of products manufactured by it under such brand name. No part of the said expenditure was expended for any purpose other than for the assessee's business. Under the circumstances, merely because by virtue of such advertisements the brand value of Rasna is enhanced and other manufacturers of the brand are also indirectly benefited, it cannot be said that the expenditure incurred by the assessee is not wholly and exclusively for its own business. It cannot be gainsaid that when any user of a brand name advertises its product, as a necessary corollary the brand value is likely to increase, thereby benefiting the owner of such brand name. If the owner of the brand name has licensed such brand to other manufacturers, it is quite possible that such other manufacturers may also be benefited on account of such advertisements as the advertisements may enhance the value of the brand as a whole. In fact, such incidental benefits are bound to accrue to the owner of the brand as well as other users of the brand name when any of the users of such brand name advertises its products. However, merely because some other persons are incidentally benefited from the advertisements issued by the assessee, the same would not change the character of the expenses from being wholly and exclusively for the purpose of its business

http://tax2.me/advertisement-expenditure-of-brand-owned-by-another-khambata-family-trust-gujarat-high-court/

[Vinay Surana]

For RBI every bank which is opened across the country it should be registered.When a bank has to be opened there are certains norms which are prescribed by RBI which may be common for all banks(Minimum Requirements) that it should be fulfilled.If such norms are only fulfilled it attains a status of so called name "BANK".Even sec 6 and 7 of banking regulation act probhits the using of the word "bank" other than those person who are not registered.Such in case just because it is not found or updated by the RBI in its schedule is mere for arguement sake we can speak otherwise this arguement is not valid on the grounds that it is not found in the schedule of RBI.Once a bank is registered it should be updated in the scedule.