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2009 (10) TMI 116 - HC - Income TaxExpenditure – capital or revenue - applicant-company (hereinafter referred to as “the assessee”), engaged in the manufacturing and sale of heat exchangers, (radiators) entered into “technical collaboration agreement” with a US company to manufacture radiators” with the technology owned by USA Company - the appellant was obliged to pay royalty at 3 per cent. of domestic sales and at 5 per cent, of export sales, to Ford Motor Company, USA for a period of 7 years for using the technology and for availing of technical services - depends on the domestic as well as export sales. Quantum of the said sales would determine the extent of royalty to be paid and it will decrease or increase every year depending upon the decrease or increase in the sales. Significantly, this payment is not because of “transfer” of technology, but for providing “technical services”. In such circumstance, we are of the opinion that this payment of royalty, which is a continuous process, should have been treated as revenue expenditure
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