The royalty payment by the assesse has been ascertained to be made only from the A.Y. 2010-11 from which the assessee had started earning regular profits. As the facts and circumstances related to such charging of royalty remains the same as in preceding years, the same is being treated as a means of reducing the taxable profit of the assessee by claiming expenditure which is not done solely for the purpose of business of the assessee. It is again clarified that the disallowance being made for expenses of royalty paid for Rs.6,72,85,014/- is on account of unjustified expenditure made- by the assessee during the current year as not being done wholly and exclusively for the purposes of the business of the "assessee” u/s 37(1) of the Act. Hence this amount of royalty expense of Rs.6,72,85,014/- is being disallowed and added to the income of the assessee. In view of the Facts and circumstances of the case, I am satisfied that the assessee company has furnished inaccurate particulars of its income, therefore, penalty proceedings, U/s 271 (1) (c ) of the Act is initiated separately for failure to disclose the true particulars of income as mentioned above.”
