1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2215 OF 2009 The Commissioner of Income Tax – 1, Mumbai ..Appellant. Versus M/s.Fowler Westrup (I) P. Limited ..Respondent. Mr.Suresh Kumar with Ms.Suchitra Kamble for the appellant. None for the respondent. CORAM : Dr.D.Y. Chandrachud & J.P. Devadhar, JJ. DATE : 22nd January, 2010. P.C. : 1. The following two questions of law have been formulated in the appeal by the revenue against the judgment of the Income Tax Appellate Tribunal dated 28th August 2008, pertaining to assessment year 2002-03; a) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is correct in law in treating the royalty as business expenditure ? b) Whether on the facts and in the circumstances of the case and in view of the decision of Mumbai ITAT Special Bench in case of Daga Capital Management (P) Limited SOT 26 Page 603 (special Bench Mumbai) the Tribunal is correct in law in confirming the order of CIT (A) in deleting the disallowance made u/s 14A of the Act ? 2. The finding of fact on the first question by the Tribunal is that the 2 assessee is a Joint Venture Company and marketed its products under a brand name owned by John Fowler (India) Limited to whom royalty was paid. The Commissioner of Income Tax (Appeals) had also held, upon analysing the royalty agreement, that the entire business / operation carried on by the assessee justified the payment of royalty and that the transaction was not bogus and sham. The Commissioner of Income Tax (Appeals) accepted the submission of the assessee that the assets and profits earned by the assessee were sourced in the brand name of M/s.John Fowler (India) Limited and hence the payment of royalty was linked inextricably to the business of the assessee. In the circumstances, on this finding of fact the payment of royalty has been allowed as a business expenditure. Having regard to the aforesaid finding of fact, the appeal would not raise any substantial question of law. 3. On the second question, the Commissioner of Income Tax (Appeals) as well as the Tribunal came to a finding of fact. The Tribunal has noted that in the year in which investments were made, the assessee had no borrowed funds and in the year under consideration the investments have been realised. Hence, it could not be said that borrowed funds have been utilized in making such investments. This is a pure finding of fact and consequently it is not necessary for this Court to entertain the second question, which is sought to be raised on behalf of the revenue. The appeal is accordingly dismissed. There shall be no order as to costs. (J.P. Devadhar, J.) (Dr.D.Y. Chandrachud, J.)