TMI Blog1979 (1) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... made a reference to the know-how agreement by which the Tuscan Co. had agreed to sell and Gandhi Electric had agreed to purchase from Tuscan Co. all technical and other information known to Tuscan Co. relating to the agreed products. Clause (c) of the preamble to the technical know-how agreement recited that the Tuscan Co. had agreed for the consideration in terms therein set out " to grant and impart to Gandhi Electric all technical know-how in its possession relating to the agreed products ". Clause 2 of the technical know-how agreement provided for payment of consideration for the technical know-how which in the assessment year in question 1965-66 worked out to Rs. 19,423. Under the agreement, Gandhi Electric was required to treat as con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... An alternative claim was made that in case allowance of depreciation and development rebate was not permitted, the said amount should be allowed as revenue expenditure. The ITO disallowed the assessee's claim on the ground that the assessee had not commenced manufacturing electric motors and generators for which it had acquired the technical know-how and, secondly, on the ground that no rebate of depreciation for know-how has been prescribed under the I.T. Rules. He also took the view that know-how was a separate asset and could not be lumped with plant and machinery and that know-how cannot be installed as required for the purposes of allowing development rebate. Even the alternative claim with regard to the revenue expenditure was reject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the widest amplitude. The meaning of the word fell for consideration before several courts. We may refer to the latest decision of this court in Income-tax Reference No. 115 of 1969 decided on 27th July, 1978 (CIT v. Bank of India Ltd. since reported in [1979] 118 ITR 809 (Bom)). In that decision the Division Bench has approved the view which is taken by the Gujarat High Court in CIT v. Elecon Engineering Co. Ltd. [1974] 96 ITR 672. The observations which have been approved in the Bank of India Ltd.'s case read as follows (at page 698 of 96 ITR 672 ) : " On reviewing these authorities, a broad consensus emerges from which the essential characteristics of plant can be clearly gleaned. The word ' plant ', in its ordinary meaning is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the accomplishment of the trading purpose. " The Division Bench has also quoted with approval the definition of to " plant " given by Lindley L.J. in Yarmouth v. France [1887] 19 QBD 647 at page 658, which was as follows : " In its ordinary sense, it includes whatever apparatus is used by a businessman for carrying on his business,--not his stock-in-trade which he buys or makes for sale ; but all goods and chattels, fixed or movable, live or dead, which he keeps for permanent employment in his business. " One has, therefore, to apply these tests and if these tests are applied, it is obvious that so far as use of the machinery for the production of the articles manufactured by the assessee is concerned, it would be impossible for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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