TMI Blog2015 (1) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... st sharing basis for reporting and communication, and changed to the Denso Group Companies world over. Since it was an actual payment in respect of the service availed by the assessee, the first Appellate authority was of the opinion that there could be no dispute in this regard. The CIT (Appeals), therefore, set aside the observations of the A.O., based upon his surmise that no service was in fact rendered and agreement was itself sham. This Court is of the opinion that findings of the ITAT affirming the conclusions of the CIT (Appeals) are reasonable.- Decided in favour of the assessee. Know-how fees - benefit of Section 35AB - Held that:- Since the depreciation under Section 32(1) is available, in respect of an amount, claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Technical Services treating the same as Revenue Expenditure? 4. Whether the Ld, ITAT was correct in allowing the claim made by the Assessee u/s 35AB the same was disallowed by the Assessing Officer? 2. Brief facts are that the assessee was promoted by Denso Corporation, Japan. The latter holds 47.93% equity in the assessee and the assessee s overall management and the control rests with Denso Japan. M/s Sumitomo a Trading Company holds 12.27% of the equity in the assessee. The assessee filed return for the year 2002-03, declared a total income of ₹ 19,44,45,442/- which was subject to scrutiny assessment. The Assessing Officer (A.O.) assessed a total income of ₹ 27,17,76,470/-. The A.O. made certain additions on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vious year i.e. ITA No. 479/Del./2004 decided by the ITAT on 20.03.2008, it was held after an elaborate analysis of case law and agreement on the record that the royalty was revenue expenditure and could not be treated as capital expenditure. The extract of that decision appears in para 6 of the impugned order. It is not disputed that no new fact or development took place or was taken into account by the A.O. Considering that consistently for 12 years identical payments were treated as revenue expenditure and in fact are entitled to be treated as such this Court is of the opinion that the question of law has to be answered against the revenue and in favour of the assessee. Question No. 2. 5. This pertains to payments made to M/s Denso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1). 7. The assessee initially had sought to avail the benefit of Section 35AB. Once the initial period ended in 1988-89, it sought whatever benefits were permissible under Section 31(1). This position has been reflected by the ITAT in the impugned order in the following terms : 15. Ground No.7 is on the disallowance of deduction under sec. 35AB of the Act. The Tribunal in its order for A.Y. 2001-02 in assessee's own case at Paras 8 9 held as follows:- 8. .The next ground is with regard to deletion ofaddition of .3.71 crores on account afknow how fee paid, we found that the assessee has debited ₹ 3.71 crores in its P L Account under the head Know how fee paid. In the return of income filed with the Department the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason to interfere in the order of CIT (A). 16. The first appellate authority followed the order of the Tribunal and in Para 10.6.3 of his order, held as follows:- 10.6.3 I have gone through the submission and contention of the appellant and have also perused the order of the CIT(A) for the assessment year 2001-02. It is brought to my notice that the revenue appeal for AY 2001-02 on this issue have been dismissed by the ITA T. Since, the issue is identical and the facts of the year under consideration are same, therefore by following the orders of the my predecessor orders for AY2001-02, the above ground of appeal is allowed, with direction that AO to allow the depreciation on the WDV of the sum of ₹ 3,8517,487 after due veri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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