TMI Blog1977 (4) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... oreign company, Messrs. Metropolitan Cammel Carriage and Wagon Company Ltd., England, amounting to Rs. 27,204 and disallowed as a capital by the Income-tax Officer should be allowed as a deductible revenue expenditure ? " This reference relates to the assessment year 1964-65. For the assessment years 1965-66 to 1969-70, at the instance of the Commissioner of Income-tax, Tamil Nadu-III, Madras, the following question has been referred to this court: T. C. Nos. 138 to 142 of 1975. " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that 25% of the 'Technical aid fees' paid by the assessee-company to the foreign company, M/s. Metropolitan Cammel Carriage and Wagon Company Ltd., Englan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior consent of Metro. (b) Metro undertakes to supply Southern at their request from time to time with full technical information, advice, manufacturing data and details which Metro may have acquired in relation to the design and manufacture of any existing type of railway wagon and which may be of assistance to Southern in tendering for any order for such wagons or in manufacturing the same in Madras. Such information and advice shall include the benefit of all the knowledge gained by Metro as a result of their long experience in the design and manufacturing of railway wagons with particular reference to welded wagons. (c) For the term of this agreement, each of the parties thereto will bring to the notice of the other all important ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use 4 which is also material may be extracted here : "This agreement shall remain in force for a minimum of ten years from the date of the signing thereof whereupon or on any date thereafter it may be terminated by either party to the agreement giving 12 months' notice in writing to the other. Upon the expiration of this agreement both parties will be free from further obligations and Southern will have the continued use, free of charge, of all information made available by Metro during the period of validity of this agreement." It is unnecessary to refer to the rest of the terms of the agreement. With reference to the payments made under this agreement, the question that arose for the consideration of the Income-tax Officer was wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said company. The technical assistance took the shape of the British company giving the assessee-company all inventions and designs relating to railway wagons, whether patented or not, owned by the British company. It also required the British company to give full technical information in relation to the design and manufacture of any existing type of railway wagon which may be of assistance to the assessee. There were also obligations, mutual in nature, to communicate important matters in the design or manufacture of any particular type of wagon and also for the purpose of training the employees of the Indian company in the British company's works. Clause 4 which we have already extracted and which appears to be crucial in the matter o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any manner take the present case out of the principle laid down in the decision of this court in Fenner Woodroffe Co. Ltd. v. Commissioner of Income-tax [1976] 102 ITR 665 (Mad). The assessee has acquired an enduring benefit by this agreement. To that extent, the amount paid is clearly capital. Learned counsel for the assessee sought to contend that the present case is governed by an earlier decision of this court in Commissioner of Income-tax v. Sarada Binding Works [1976] 102 ITR 187 (Mad). The assessee in that case entered into an agreement with one Nagi Reddy under which it obtained the right to run a business for a consideration of Rs. 5,000 per annum plus a sum equal to 10% of the net profit of each year of business. By a settle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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