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The Commissioner Of Income Tax Delhi-IV Versus Daikin Air-Conditioning India Pvt. Ltd.

2015 (4) TMI 332 - DELHI HIGH COURT

Addition on account of technical fee - whether is capital expenditure? - Held that:- Considering the material on record, especially the terms of the technical know-how agreement such as Article 14.3, 17, 17.1, 18, 18.2 and 22. The exercise of determining whether, regardless of nomenclature, any expenditure is in the revenue or the capital stream cannot be stereo typed into any formula. As noticed in Alembic Chemicals Work Co. Ltd. vs. CIT (1989 (3) TMI 5 - SUPREME Court) The exercise, therefore, .....

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r the Appellant : Mr.Rohit Madan and Mr.Ruchir Bhatia, Advs. For the Respondent : None MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT) 1. The Revenue is aggrieved by the order of the Income Tax Appellate Tribunal (ITAT) dated 30.11.2012 in ITA No.1328/DEL/2011. The question of law sought to be urged is Whether the sum of ₹ 43.75 lakhs originally added by the Assessing Officer (AO) on account of technical fee is capital expenditure. 2. The relevant facts are that the assessee in Assessment Year ( .....

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ity control, operation and maintenance of the products during the terms of the agreement. The assessee company paid, inter alia, technical access fee of USD 3 lakhs payable in three equal installments when the first installment of ₹ 43.75 lakhs was paid. The AO felt that this was a capital expenditure and sought to bring it to tax by disallowing the whole amount. The CIT (Appeals) however accepted the assessee s contention and directed exclusion of that amount and held that it properly fel .....

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s not a case of absolute transfer of Daikin Technology. The assessee's right to use license was being hedged with all sorts of conditions as noted above. 25 . The assessee had acquired the business of Siel Ltd. on a going concern basis vide business purchase agreement dated 8th August, 2000. The technological collaboration agreement with Daikin entered into on the same date primarily facilitated in improving the technical aspect of manufacturing but it did not essentially formed part of the .....

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