TMI Blog2006 (5) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... al by the Revenue against the order passed by the Income-tax Appellate Tribunal, Chandigarh-B, in I. T. A. No. 244/Chd./2000, dated March 29, 2004, raising the following substantial questions of law: "(i) Whether in law the royalty and cess of royalty paid as a percentage of net selling price of licensed product is a capital expenditure not allowable as a deduction under section 37 of the Income-tax Act. (ii) Whether the hon'ble Income-tax Appellate Tribunal was right in law in allowing deduction under section 35AB even after observing that the conditions for claim of the said deduction were not fulfilled." We have heard Shri Yogesh Putney, advocate for the Revenue, and Shri P. C. Jain, advocate for the respondent and with their conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 99 of 2002 CIT v. Swaraj Engines Ltd. [2008] 301 ITR 284 (P H) decided today, the first substantial question is answered against the Revenue and in favour of the assessee. 6. As far as the second question is concerned, the Assessing Officer, on examination of the terms and conditions of the agreement entered into between the assessee and M/s. Teba Ltd. came to the conclusion that the payment to M/s. Teba Ltd. by the assessee under the agreement was not a lump sum consideration and, thus, the basic pre-requisite for application for section 35AB of the Act was not fulfilled. However, the Commissioner of Income-tax (Appeals) in appeal against that order accepted the claim of the assessee. In the appeal filed by the Revenue against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argument raised by counsel for the Revenue. Once a definite finding had been recorded by the Tribunal that the claim of the assessee is not covered under section 35AB of the Act there was no valid reason for the Tribunal to have accepted the claim for any other reason. The claim of the assessee was not that because it is entitled to the benefit similar or greater in extent as compared to what is availed of under section 35AB of the Act under some other provision so the deduction already permitted by the Commissioner of Income-tax (Appeals) should be allowed to remain as such. By filing the return the assessee had claimed such deduction under section 35AB of the Act which clearly has been found by the Tribunal to be not admissible under that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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