TMI Blog1982 (12) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... on of library for the assessment year 1973-74 ? " The Tribunal and other authorities under the Act have negatived the assessee's claim for depreciation on the ground that the judgment of this court in R.C. No. 21 of 1971, dated January 17, 1973, clearly negatives such a claim, and hence it cannot be allowed. Mr. Y. V. Anjaneyulu, the learned counsel for the assessee, contends before us that the authorities and the Tribunal have erred in understanding the judgment of this court as covering the question now at issue. He submits that the said decision did not consider this aspect and did not pronounce upon the precise question now at issue, and hence the said judgment cannot be treated as conclusive upon the question referred. To appreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... library. The assessee's case was that the payment of Rs. 1,60,000 made to the Hungarian company has been debited under the head " Library" and, therefore, it is entitled to depreciation thereon under s. 32 of the Act. This claim was rejected by the ITO who held that the price paid for acquiring technical know-how amounts to capital expenditure and since no tangible or depreciable asset was brought into existence, the claim for depreciation is unsustainable. On appeal, the AAC held that, inasmuch as the assessee had purchased outright the specimen drawings, charts, plans, etc., on payment of Rs. 1,60,000 and since they can be termed as " books", the assessee is entitled to depreciation. Aggrieved by the decision of the AAC, the Department we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing the Department's appeal challenging the direction by the Appellate Assistant Commissioner to grant depreciation at the rates applicable to books ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in allowing a sum of Rs. 12,000 as revenue expenditure while disposing of the departmental appeal, particularly when the point urged before the Appellate Tribunal was not whether it was a revenue item of expenditure, or not?" The Tribunal, however, referred only the following consolidated question for the opinion of this court: " Whether, on the facts and in the circumstances of the case and on a true interpretation of the collaboration agreements between the assessee and M/s. Metrimpex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be held to be an out-and-out sale-of technical know-how as the main object and purpose of the agreements is to enable the assessee to manufacture theodolites and to acquire the right to sell them ; and the other clauses are only auxillary or incidental. The use of the words " supplies " and " supply " in clause 3 and the word " services " in clause 6(m) of the agreement support the plea advanced on behalf of the Department, that the designs, drawings and charts are illustrative of the services rendered by the foreign collaborator. It is pertinent to notice that the terms of the agreement rule out the theory of sale or purchase of designs, drawings and charts, etc." It is these observations which are relied upon by the authorities and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppon Electronics (P.) Ltd. v. CIT [1979] 116 ITR 231 (Kar); CIT v. Emco Electro Pvt. Ltd. [1979] 118 ITR 864 (Bom); CIT v. Festo Elgi P. Ltd. [1981] 129 ITR 499 (Mad); Catalysts Chemicals India (West Asia) Ltd. v. CIT [1982] 137 ITR 110 (Ker); D H Secheron Electrodes v. CIT [1981] 132 ITR 1 (MP) and CIT v. Belpahar Refractories Ltd. [1981] 128 ITR 610 (Orissa)). A reading of the judgment of this court in R. C. No. 21 of 1971 as also a reading of the agreement which have been placed before us, clearly shows that the payment of Rs. 1,60,000 under the two agreements is clearly for and on account of the technical know-how which the Hungarian company imparted to the assessee in the shape of drawings and designs. Following the uniform autho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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