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2015 (10) TMI 2313 - HC - Income TaxPayment of technical know-how fee - revenue expenditure or capital in nature - Held that:- in terms of Article 5.1(d) of the Agreement. These clauses viewed in the context of the intention of the parties would certainly point out that both the parties intended to benefit for a considerable period of time out of the relationship emanating from the agreement. Even though in the Bio-technology field changes are likely to happen in fast phase, the assessee still has the benefit of the same in view of the dynamic nature of the agreement entered into between the assessee and the technology provider. This in our considered view is a distinct and distinguishing factor, which would benefit the assessee giving an enduring benefit to the assessee. In that view of the matter, the judgment of the Supreme Court in Alembic Chemicals Case (1989 (3) TMI 5 - SUPREME Court ) is distinguishable. In that view of the matter, apportioning a part of the expenditure in the nature of a capital expenditure by the CIT Appeals cannot be termed as erroneous. This single distinguishing factor is sufficient to answer the Question in favour of the revenue and against the assessee. Expenditure on account of payment of royalty - revenue v/s capital expenditure - Held that:- It is agreed to be paid by the assessee and the same needs to be treated as revenue expenditure particularly considering the fact that the same is linked to the percentage of consideration received on sale of the products produced by the assessee by use of the Germplasm and with the help of the technical know-how. - Decided against the revenue.
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