9911796707
TMI Blog2012 (6) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... e now concluded by the judgments of the apex court. 2. The brief facts leading to this proceeding is as under : For the assessment year 1995-96, the assessee-company furnished return of income declaring total income of Rs. 1,96,03,050. It was processed under section 143(1)(a) by making prima facie disallowance under section 43B in respect of unpaid sales tax for Rs. 2,450. Later the case has been taken up for scrutiny and accordingly notice under section 143(2) was issued to the assessee-company. The assessee incurred an amount of Rs.21,50,000 towards technical fee which was paid to the foreign technicians. The assessee was called upon to show cause why the said amount should not be covered under section 35AB of the Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or use of technical expertise rather than for acquiring any technical know-how. Acquiring some knowledge by the personnel of the assessee when they are trained by foreign technician is different than acquisition of technical know- how. Thus, the expenses did not fall within the meaning of section 35B, but can be considered as revenue expenditure under section 37(1) of the Act. Thus, it held the entire expenses was allowable as deduction instead of one- sixth. Aggrieved by the said order, the Revenue is in appeal. 3. At the time of admitting this appeal, though three substantial questions of law were raised in the appeal memo, it was held question No. 2 is already answered against the Revenue in the connected matter by this court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ". Section 35AB applies to a case of lump sum payment of consideration for acquiring a know-how to be used for a manufacturing process. Therefore, payment made to a company for providing the assistance of its technicians to impart that know-how would not fall under section 35AB as it is a revenue expenditure. The Tribunal, on a proper consideration of the terms of the two agreements, keeping in mind the statutory provisions and the judgments on the point has rightly held that the assessee is entitled to deduction under section 37(1) of the Act and, therefore, the case do not call for any interference. 6. In order to appreciate the rival contentions, certain undisputed facts have to be noticed. Admittedly, there are two agreements da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as agreed that the Molex shall arrange for the visits of its technicians to the assessee plant in India for the purpose of assisting the assessee in connection with the manufacture, testing, inspection and quality control of the product and to impart nec- essary know-how and expertise the assessee's personnel for the use and exploitation of the technical data and improvements thereto. 8. It is significant to note that the assessee had to directly bear the air fare and other travelling and living expenses of each such technician. Further, the assessee had to pay Molex, fees as was mutually agreed and as was permissible, per man for each day. The said payment was in addition to the air fare and other travelling living expenses of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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