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2012 (4) TMI 129 - HC - Income TaxApplicability of Section 35AB to expenditure incurred on preliminary survey resulting in agreement for transfer of technical know how – Assessee company entered into agreement with foreign company for conducting preliminary survey, subsequently entered into collaboration agreement with same foreign company for transfer of technical know-how – payment to be made in installments – A.Y. 1994-95 - Held that:-If a technical collaboration agreement were not to culminate as a result of the preliminary survey which was carried out for the assessee, obviously there would be no transfer of technical know-how. Therefore, CIT(A) and Tribunal have rightly held non-applicability of Section 35AB since amount was paid for preliminary survey and not for transfer of technical know-how. However allowable u/s 37. Further, though the payment for know-how was liable to be effected in installments, it was nonetheless a fixed sum which had been agreed between the parties and was, therefore, a lump sum within the meaning of Section 35AB – expenditure on know-how eligible u/s 35AB – Decided against the Revenue. Matter related to deletion of addition on valuation made by A.O, is restored back to Tribunal to decide afresh. Also, matter related to deduction of lease rent and depreciation on leased assets for computing eligible profits u/s 80HHC is restored back to A.O.
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