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2013 (4) TMI 11 - HC - Income TaxTransfer of technology know-how – expenditure on know-how – whether the expenditure incurred is revenue expenditure or whether it is an expenditure which is capital in nature - Held that:- Assessee had not purchased or obtained ownership of such technical know-how from the foreign company. The assessee was merely a licensee for the purpose of its business temporarily. For such acquisition of know-how, the assessee paid lump sum payment. It had also come on record before the Tribunal that such technical know-how was used for the purpose of manufacturing the existing items which the assessee was manufacturing since years. - the expenditure are revenue in nature. Reliance made in the case of Commissioner of Income Tax v. Swaraj Engines Ltd. [2008 (5) TMI 257 - SUPREME COURT]. The provisions of section 35AB of the Act can apply only in case of capital expenditure and of course, provided the conditions set out therein are fulfilled. In such a case, during the period when section 35AB remained in operation, the assessee could claim benefit thereof. However, such provision would not apply to a revenue expenditure even if the same was incurred for acquisition of technical know-how. Deduction on such expenditure was available even before the introduction of section 35AB of the Act and such deduction cannot be curtailed or limited by applying section 35AB. In that view of the matter, taking such an expenditure out of section 37(1) of the Act, would not arise. The tax appeals are dismissed.
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