TMI Blog2012 (8) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... t, which could give rise to royalty income to the assessee in future. Therefore, payments resulted in creation of a commercial right to the assessee over such developed components. Further, benefit was of an enduring nature. Same has been rightly held as intangible asset eligible for depreciation. Moreover, assessee himself has treated it as a capital out go and claim of it being revenue in nature was never made by filing a revised return. In the original return, assessee had itself claimed only depreciation – Decided against assessee - ITA. 2003/Mds/11 CO No.11/Mds/12 - - - Dated:- 11-6-2012 - SHRI ABRAHAM P.GEORGE AND SHRI CHALLA NAGENDRA PRASAD, JJ. Revenue by : Shri Ms. Anirudh Rai C.I.T. DR Assessee by : Shri T. Banusek ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso submitted before Assessing Officer that the amounts had to be considered as revenue expenditure, though it had erroneously capitalized it. However, Assessing Officer was not impressed. According to him, the purpose for which design was created by Fujitsu for assessee, clearly showed that it was in the nature of a capital expenditure. Assessee, though it had correctly capitalized the amount in its books, no assets were effectively added to the block of plant and machinery, for allowing claim of depreciation. As per Assessing Officer, depreciation claimed on such capitalized sum could not be allowed. Similar disallowance of claim for depreciation, was also made on development charges paid for developing liquid crystal display, based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly assailing the order of Commissioner of Income Tax(Appeals), submitted that payments were only in the nature of technical fees. According to him, assessee had capitalized such payments in its books of accounts, but nevertheless no capital asset was created. The payments were given to another company for development of a component. The technology developed belonged to such other company and assessee could only get the components from such company. Hence according to him it was not in the nature of any asset acquired by assessee. Since assessee had derived no benefit, Assessing Officer had rightly rejected the claim of depreciation. As for the claim of the assessee that it had to be allowed as Revenue expenditure, Learned Departmental Rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loped were sold to any other persons by M/s.Fujitsu, then royalty was payable to assessee. So the payments had eventually led to the creation of a type of asset, which could give rise to royalty income to the assessee in future. If Fujitsu sold such components to any other persons, then royalty became payable to assessee. This being the case, the payment of the amount to M/s.Fujitsu had, as held by Commissioner of Income Tax(Appeals), resulted in creation of a commercial right to the assessee over such developed components. Though only, M/s. Fujitsu could supply the components to the assessee, without doubt an intangible asset had been created, on which assessee had a control, since it could give it income in the nature of royalty. Such b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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