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2015 (1) TMI 240 - KARNATAKA HIGH COURTTreatment of 25% of Royalty – Capital expenses or not – Royalty payments made for transfer of technical knowhow for manufacturing process in engineering input scientific and practical information and formula research data design and manufacturing procedure know how raw material data expertise specifications for designing and manufacturing to Herbalife International Incorporate – Held that:- The two provisions have not been looked into by any of the authorities - the provisions disclose that the agreement entered into between the parties provides for renewal automatically - Clause 6.2 makes it abundantly clear that no proprietary interest shall be transferred to the assessee in respect of the files, lists, records, documents, drawings, specifications and other technical information which was furnished to the assessee by the licensor - it cannot be said that the assessee got any enduring benefit in the agreement which is a condition precedent for treating the payment as capital expenditure – thus, the Tribunal passed the order and held the entire amount as revenue expenditure – Decided against revenue.
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