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TMI Blog1977 (4) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... strial Research, Chandigarh. The assessee had entered into an agreement with the "Council of the Scientific and Industrial research, Chandigarh" by virtue of which it acquired a technical "Know how", a manufacturing the above mentioned two precision instruments for a term of ten years. Against his licence to manufacture instruments of these newly invented prototypes, the assessee had made a payment of Rs. 20,000 to the above Scientific Council. The Council had granted licence to the assessee to manufacture the above instruments on an exclusive basis covering the whole of India for a period of ten years as specified in the agreement. According to the Income-tax Officer by expending the sum of Rs. 20,000 a benefit of enduring nature had ensur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s-objection contending that the payment of Rs. 20,000 made to C.S.I.R. is an expenditure on scientific research is an allowable expenditure under s. 35 of the Income tax Act. 5. The learned Departmental Representative submitted that assessee acquired a manufacturing technique for which exclusive rights to manufacture the instruments were acquired for ten years for newly invented prototypes covering whole of India by expending Rs. 20,000 as a benefit of enduring nature and endured to the assessee as a new line of business was brought in to existence. 6. The learned counsel for the assessee submitted that assessee did not acquire a new manufacturing technique. It was already in the field and was manufacturing the instruments earlier to entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the payment made to C.S.I.R. under an agreement for removing the possibilities of recurring disadvantages cannot be considered as a payment made to acquire an enduring advantage. Thus the payment made to C.S.I.R. was an expenditure not made for acquiring any enduring benefit or income yielding asset, but was for running the business more economically and conveniently and as such the expenses were in the nature of revenue and are allowable under s.37 of the Act. It was further submitted that learned Appellate Assistant Commissioner was wrong in holding that s. 35 is not applicable unless the work of research is undertaken on behalf of the appellant. According to the learned counsel, s.35 (1) and sub s. (ii) does not say that such research ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een running business more economically, conveniently and was relieved from certain disadvantages with which it was faced earlier. Thus it is clear that by incurring the expenditure the assessee did not acquire any advantage of enduring nature. Thus the learned Appellate Assistant Commissioner was right in holding that the expenses in question were of revenue nature and as such are allowable under s.37 of the Act. 9. The other point which remains for decision is whether the expenses are allowable under s. 35 (1) (ii) of the Act or not. 'Scientific research' means any activities for the extension of knowledge in the fields of natural or applied science including agriculture, animal husbandry or fisheries. The said definitions is not exhausti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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