TMI Blog2013 (1) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... aim for depreciation u/s 40(a)(i) - Payments made for technical know-how which had been capitalized, no TDS has been deducted thereon - Revenue disallow depreciation of such know-how – Held that:- Revenue was unable to substantiate that in the absence of any requirement of law for making deduction of tax out of the expenditure on technical know-how which was capitalized and no amount was claimed as revenue expenditure, the deduction could be disallowed u/s 40(a)(i). There was also no reason to disallow depreciation on such capitalized amount as the aforesaid provision does not deal with deduction of depreciation - In favour of assessee - ITA No. 57 of 2009 - - - Dated:- 8-10-2012 - MR. AJAY KUMAR MITTAL AND MR. G.S. SANDHAWALIA. JJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 35AB also falls within these sections? 2. Put shortly, the facts necessary for adjudication of the present appeal as narrated therein are that the assessee filed its return for the assessment year 2003-04 on 27.11.2003 declaring a loss of Rs. 7,90,68,960/-. The assessment was completed vide order dated 28.3.2006 at a loss of Rs. 7,78,55,860/-. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [in short the CIT(A) ]. The CIT(A) vide order dated 19.9.2007 allowed the appeal and observed with regard to addition of Rs. 5,24,929/- under Section 43B of the Act that the Assessing Officer should verify the details and allow the deduction in case the payments had been made within grace period allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee could be disallowed claim for depreciation under Section 40(a)(i) of the Act on the ground that the payments made for technical know-how which had been capitalized, no tax deduction at source has been made thereon. The Tribunal while accepting the plea of the assessee, in para 3, had noticed as under:- 3. Ground no.4 is against deletion of an addition of Rs.6,88,175/- made by the AO on account of deduction of depreciation on technical know-how as the assessee failed to deduct tax in accordance with the provision contained in section 40(a)(i). The finding of the learned CIT(A) was that the assessee had incurred expenditure by way of technical know-how, which was capitalized amount as made in the return of income. Since the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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