TMI Blog2012 (7) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... by the provisions under Section 37 the said expenditure qualifies for deduction u/s 37 and hence Section 35AB has no application to the facts of the case - in favour of assessee. - Tax Case (Appeal) Nos.1274 of 2005 - - - Dated:- 8-6-2012 - Mrs.Justice CHITRA VENKATARAMAN, Mr.Justice K.RAVICHANDRA BAABU, JJ. For appellant : Mr.T.Ravikumar Standing Counsel for Income Tax For respondent : Mr.R.Vijayaraghavan O R D E R CHITRA VENKATARAMAN, J. The following is the question of law raised in this tax case appeal filed by the Revenue against the order of the Income Tax Appellate Tribunal relating to the assessment year 1996-97. Whether in the facts and circumstances of the case, the Tribunal was right in holding tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expenditure incurred in obtaining the technical know-how, the assessee claimed the same as revenue expenditure. The Assessing Officer, however, pointed out that the claim could only be considered under Section 35AB. Thus, the claim of the assessee for deduction of the expenditure towards technical know-how as revenue expenditure was rejected. Aggrieved by the said order, the assessee went on appeal before the Commissioner of Income Tax (Appeals), who pointed out that as a matter of fact the requirements of technical know-how varied from customers to customers and contracts to contracts and each contract had been customised for setting up the plants to suit the requirements of the customers and the assessee did not carry on any particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel submitted that when the expenditure incurred is for the purpose of manufacturing activity in pursuance of a turn-key project, and thus the expenditure solely related to carrying on or conduct of the business, the same has to be regarded as integral part of the profit making process and not for acquisition of an asset or a right of permanent character. Thus, even applying the decision of the Apex Court reported in (1989) 177 ITR 377(SC) (Alembic Chemical Works Co., Ltd., Vs. Commissioner of Income Tax), the expenditure could be considered only as a revenue expenditure. 5. Heard the learned counsel appearing on either side. 6. As rightly submitted by the learned counsel for the assessee, the question as to whether the expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company supplies the latest technical developments in connection with the manufacture of tractors and diesel engines. The assessee was obliged to maintain secrecy about the technical documents and in consideration of the use of the technical know-how, the assessee was to pay to the German Company certain sums of money at fixed intervals. Thus, on an overall consideration of the facts, the Bombay High Court held that the payment was for for various services under the agreement for efficient running of the business of the assessee and better profitability. There was no acquisition of the know-how by the assessee. The expenditure incurred by the assessee for getting the technical know-how and other assistance was on account of revenue expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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