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2013 (10) TMI 515 - ITAT DELHICapital or Revenue expenditure - Disallowance of royalty expenses - CIT held that payment of royalty was partly towards capital and partly towards the revenue - Held that:- know-how was granted by the foreign company solely for the purpose of manufacture, assembly and sale of products during the term of the contract and the licensee was to pay royalty to the licensor. The drawings and designs which were supplied by the licensor only enabled the assessee to manufacture the goods, namely, the shock absorbers. The assessee was required to change the design of such shock absorbers from time to time for which new drawings and designs were required. For the aforesaid purpose, the training of the personnel of the assessee was imperative. If the agreement is read in entirety in a purposeful manner, there can be no trace of doubt that the know-how acquired relates to the process of manufacturing and for a tenure and the documents, designs and specifications which have been supplied by the licensor are only for facilitating the said purpose of manufacturing - Following decision of CIT v. T.E.I. Technologies P. Ltd. [2008 (2) TMI 275 - DELHI HIGH COURT] - Decided in favour of assessee.
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