TMI Blog2011 (7) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... atable u/s 37(1) of the Act - Thus, answer the question in favour of the Assessee and against the Revenue. - ITA No.1943/2010, 763/2011 & 765/2011 - - - Dated:- 11-7-2011 - MR. JUSTICE A.K. SIKRI, MR. JUSTICE M.L. MEHTA, JJ. Mr. Sanjeev Sabharwal, Advocate for the appellant. Ms. Kavita Jha, Advocate for the respondents. M.L. MEHTA, J. 1. The question of law which arises for consideration in these appeals is common. These appeals concern with the same Assessee, though these pertain to different Assessment Years. 2. ITA 1943/2010 and ITA 765/2011 are directed against the impugned common order dated 10.07.2009 of the ITAT (for short the Tribunal ). These pertain to assessment years 2003-04 and 2002-03 respectivel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er was also framed under Section 143(3) of the Income Tax Act ( the Act for short) wherein it was observed by the Assessing Officer that assessee had paid royalty in lieu of technical knowhow assistance from M/s Group 4 Falck A/S, Denmark for exclusive use for five years, which was extendable by every five years in terms of agreement dated 20.06.2002. The assessee had debited certain amount to Profit Loss Account by way of royalty for technical knowhow and use of trade mark to a foreign company namely M/s. Group 4 Falck A/S, Denmark for the right to use logo, trade mark and technical knowhow in pursuance of agreement dated 20.06.2002 through Group 4 Holding Pvt. Ltd. on the basis of 1% of net sales. The payment of the royalty was approve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td., that a further sub license agreement was entered into by Group 4 Holding Pvt. Ltd. and the Assessee. This sub license agreement is also dated 20.06.2002. 8. Similar definition of trade mark, G4F knowhow, as existing in the agreement between G4F and Group4 Holding Private Limited are also incorporated in the sub license agreement. Clause 4.1 of the sub license agreement provides for the operational period of the agreement for a term of 5 year from the effective date, and continuance thereafter for further successive 5 years period unless either party give 6 months written notice to other party prior to the end of any such 5 year period that the agreement should not be renewed. Clause 17 of the sub license agreement acknowledges tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trade mark and right to use knowhow could not be considered to be of enduring nature and thus capital expenditure. The expenditure was to be of revenue nature. In the case of Jonas Wood Head and Sons Vs. CIT, 117 ITR 55, it was held that the question regarding capital or revenue expenditure depends on the terms of agreement in each case. In the case of CIT Vs. Gujarat Carbon Ltd., 254 ITR 294, it was held that the payment of revenue under the agreement was directly relatable to services which were in the revenue field and were allowable as revenue expenditure. In the case of Goodyear (I) Ltd. Vs. ITO 73 ITD 189(Delhi), the assessee had not acquired ownership right of technical knowhow but transfer of use of licenses. There was no advantage ..... X X X X Extracts X X X X X X X X Extracts X X X X
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