9911796707
TMI Blog2002 (9) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... e manufacture of product made by the assessee was sodium formate. That material was being purchased by the assessee from abroad. With a view to manufacture sodium formate in India the assessee entered into collaboration agreements for acquisition of know-how with Calonic of West Germany and Mitsubishi Corporation of Japan. Liquid petroleum gas was an essential requirement in the process acquired. After the payments were made in part to the company in Japan, and in whole to the German firm, the assessee had to abondon the project as the Government of India declined to make available the liquid petroleum gas for industrial purposes. The assessee's claim for deducting the payments made as revenue expenditure was negatived by the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus: "For the purposes of this section, 'know-how' means any industrial information or technique likely to assist in the manufacture or processing of goods or in the working of a mine, oil well or other sources of mineral deposits (including the searching for, discovery or testing of deposits or the winning of access thereto)." Industrial information which is likely to assist in manufacture being know-how" the industrial information obtained by the assessee in this year being information which was likely to assist in the manufacture of processing goods, the assessee is prima facie entitled to the deduction under section 35AB. There is no doubt about the fact that the assessee had, in fact, entered into agreements with the suppliers of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 35AB and the deduction allowable in respect of such know-how was 1/6th of the amount paid as lump-sum consideration for acquiring the know-how. Once it is shown that such expenditure was incurred for acquiring of know-how for use for the purpose of the assessee in the previous year, deduction was required to be given. If in a subsequent year by reason of return of the know-how the assessee derived a benefit, inclusion of the value of the benefit in the income of the assessee, if it was permissible, was a matter for consideration in the subsequent year that would not affect the right of the assessee to receive the benefit of the deduction in the year in which lump-sum consideration was made. Section 35AB is designed to provide relief to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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