TMI Blog2010 (1) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... id agreement. In view of the absence of detail and discussion in the order, it is difficult for this court to determine whether the expenditure incurred towards technical know-how is the revenue or capital expenditure - The authorities below have not given any details regarding the technical know-how payment. In these circumstances, the order passed by the Tribunal is set aside and the matter is remitted back to the Income-tax Appellate Tribunal - 629 of 2004 - - - Dated:- 19-1-2010 - D MURUGESAN and P. P. S. JANARTHANA RAJA JJ. T. Ravikumar for the appellant. V. S. Jayakumar for the respondent. JUDGMENT P. P. S. JANARTHANA RAJA J. - The above tax case appeal is filed by the Revenue under section 260A of the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal before the Commissioner of Income-tax (Appeals), Coimbatore. The said Commissioner (Appeals) confirmed the assessment and dismissed the appeal. Aggrieved by that order, the assessee has filed an appeal before the Income-tax Appellate Tribunal, Chennai. The Tribunal has held that the amount paid towards technical know-how is a revenue expenditure and allowed the entire amount claimed by the assessee and allowed the appeal. As against that order, the Revenue has filed the present appeal. 4. The learned counsel appearing for the Revenue submitted that the Tribunal is wrong in allowing the technical know-how expenditure as revenue expenditure under section 37 of the Income-tax Act, 1961. He further submitted that the Tribunal ought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1989] 177 IIR 377 (SC); and (4) CIT v. I. A. E. C. (Pumps) Ltd. [1998] 232 ITR 316 (SC). 7. In the aforesaid decisions only applicability of section 37 of the Act has been considered and nowhere the scope of section 35AB of the Act has been dealt with. The apex court in the case of CIT v. Swaraj Engines Ltd. [2009] 309 ITR 443, while considering the scope of section 35AB, held as follows (page 444): "On the first question, it has been vehemently urged by Shri Iyer, learned senior counsel on behalf of the respondent-assessee, that the High court was right in dismissing the Department's appeal in limine following its earlier judgment in the case of CIT v. JCT Electronics Ltd. [2008] 301 ITR 290 (P H) in I. T. A. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chnology know- how under the agreement dated October 19,1989, is a revenue expenditure and does not come within the ambit of the provisions of section 35AB of the Income-tax Act, 1961, whereas the payment is a capital expenditure in view of the following judgments: (A) Fenner Woodroffe and Co. Ltd. v. CIT [1976] 102 ITR 665 (Mad); (B) Ram Kumar Pharmaceutical Works v. CIT [1979] 119 ITR 33 (All); (C) CIT v. Warner Hindusthan Ltd. [1986] 160 ITR 217 (AP); and (D) CIT v. Southern Switchgear Ltd. [1984] 148 ITR 272 (Mad).' On a bare reading of the said question, it is clear that applicability of section 35AB in the context of royalty paid to Kirloskar as a percentage of the net sale price being revenue or capital in n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to between the assessee and the foreign collaborator and the Revenue has not enclosed the copy of the said agreement. In view of the absence of detail and discussion in the order, it is difficult for this court to determine whether the expenditure incurred towards technical know-how is the revenue or capital expenditure. The authorities below have not given any details regarding the technical know-how payment. In these circumstances, the order passed by the Tribunal is set aside and the matter is remitted back to the Income-tax Appellate Tribunal, "C" Bench, Chennai, to decide the matter afresh in accordance with law as expeditiously as possible, after giving opportunity to the assessee. 9. The above tax case appeal is allowed and the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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