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2015 (5) TMI 584 - AT - Income TaxDisallowance of claim of royalty payment - Revenue or capital expenditure - payment made by the assessee in pursuance of the agreement entered by the assessee with “PPME” - Held that:- In the instant case, the duration of the agreement was utmost for two years only. The assessee does not become owner of the technical knowhow. It had to return back all data, information etc. on completion of the agreement. It has to maintain strict confidentiality about the technology. Further, the assessee itself has capitalised the technology transfer fee. The royalty amount is paid to provide operational and commercial support. Under these set of facts, we are of the view that the royalty amount paid by the assessee should be treated as revenue expenditure only. We find support for our view from the decision rendered by the Hon’ble Supreme Court in the case of CIT Vs. I.A.E.C (pumps) Ltd (1997 (4) TMI 14 - SUPREME Court ). - Decided in favour of assessee.
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