High Court of Delhi · Judgments and reasoned final orders
Principal Commissioner of Income Tax-12 v. M/s Remfry and Sagar & Anr.
ITA Nos. 273, 274, 275, 276 & 285 of 2026 ·
Allowability of goodwill licence fees paid by a law firm (M/s Remfry & Sagar) to a private limited company (M/s Remfry & Sagar Consultants Pvt. Ltd.) as a business deduction under Section 37(1), and deletion of ad-hoc disallowance of proportionate foreign travel expenses; Explanation 1 to Section 37(1) not attracted following PCIT v. M/s Remfry & Sagar (2025:DHC:563-DB).
1. FACTS OF THE CASE
The Revenue filed five connected appeals (ITA Nos. 273, 274, 275, 276 & 285/2026) challenging the ITAT orders allowing deduction under Section 37(1) for goodwill payments made by the law firm M/s Remfry & Sagar to M/s Remfry & Sagar Consultants Pvt. Ltd. (contending that fee-sharing with a non-advocate company violated the Bar Council of India Rules and the Advocates Act, 1961) and deleting disallowance of proportionate foreign travel expenses (in ITA 274/2026).
2. DISCUSSION BY THE COURT
The Division Bench reproduced paragraphs 26–37 of the coordinate bench judgment dated 31.01.2025 in the assessee's own case (PCIT v. M/s Remfry & Sagar, ITA 199/2017, NC: 2025:DHC:563-DB), which held that the payment was consideration for the right to use the acquired goodwill of the historical firm since 2001 rather than prohibited fee-sharing, and did not constitute an expenditure incurred for an offence or prohibited by law under Explanation 1 to Section 37(1). Further, the deletion of proportionate foreign travel disallowance in ITA 274/2026 rested on pure appreciation of facts and raised no substantial question of law.
3. JUDICIAL DECISION
Following the coordinate bench judgment dated 31.01.2025 in ITA 199/2017 to maintain consistency, the High Court dismissed all five Revenue appeals.
4. OUTCOME
Assessee - All five Revenue appeals dismissed; allowance of goodwill expenditure and foreign travel expenses under Section 37(1) upheld.
5. AKHB REVIEW POINT
Consideration paid by a professional firm for licensing pre-existing brand/goodwill under a commercial arrangement accepted since AY 2003-04 is allowable under Section 37(1) and is not hit by Explanation 1 thereto.
Source and verification
6-page official High Court of Delhi judgment PDF (DLHC011102742025_1_2026-04-02.pdf, 57,858 bytes).
Original PDF: 6 pages · SHA-256: 2542468bb2a0322c0680ce34b76d0e3af37e59802c85b89a04f4207442291638
Supplied source-reviewed note retained; original bytes and identity validation checked in this release. Substantive re-review is not claimed for this record.
Applies Section 37(1) and Explanation 1 thereto of the Income-tax Act, 1961. Income-tax Act, 2025 equivalence is not verified.
Full 6-page primary judgment PDF text read and verified page-by-page. Follows coordinate bench decision in the assessee's own case in PCIT v. M/s Remfry & Sagar, ITA 199/2017 (2025:DHC:563-DB, decided 31.01.2025).
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