Fee Paid by Law Firm Remfry & Sagar for Goodwill is a Business Expense Deductible U/S 37 of IT Act

The Delhi High Court ruled that the license fee paid by IP law firm Remfry & Sagar to acquire the goodwill vested in a company is a legitimate business expense deductible under Section 37 of the Income Tax Act.  

This case involved a fee paid by Remfry & Sagar to Remfry & Sagar Consultants Private Limited (RSCPL), a company owned by the founder’s family, for the use of goodwill.

The Assessing Officer (AO) disallowed the deduction, calling it a "colourable transaction" to divert funds.

The High Court dismissed the appeal, affirming that Goodwill is a valid business asset and payment for its use is not illegal, the transaction was not a tax avoidance scheme.