Licence Fee Paid for Goodwill Held as Business Expense : Delhi High Court

The Delhi High Court dismissed appeals by the Principal Commissioner of Income Tax against law firm Remfry & Sagar, holding that licence fees paid towards the firm’s goodwill qualify as legitimate business expenditure under Section 37 of the Income Tax Act, 1961.

The Income Tax Department argued that the payment violated Bar Council rules by sharing professional fees with non-lawyers.

However, the Court upheld the Income Tax Appellate Tribunal’s view that the licence fee was a lawful business expense and did not breach professional ethics.

[Principal Commissioner of Income Tax v Remfry & Sagar]