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Issues Involved:
1. Deduction of Rs. 78,400 on an amortized basis. 2. Deduction of Rs. 3,21,485 as revenue expenditure. 3. Jurisdiction of the Tribunal regarding enhancement of assessment. 4. Deduction of Rs. 18,53,023 as revenue expenditure. 5. Alternative claim of Rs. 3,59,510 on an amortized basis. 6. Depreciation allowance on technical assistance fee. Summary: Issue 1: Deduction of Rs. 78,400 on an amortized basis The Tribunal disallowed the claim of the assessee for deduction of Rs. 78,400 on an amortized basis, representing unabsorbed revenue expenditure incurred by the assessee on account of its rail coach division. The Tribunal noted that there is no legal authority for allowing revenue expenditure on a deferred basis or on amortization. Issue 2: Deduction of Rs. 3,21,485 as revenue expenditure The Tribunal disallowed the assessee's claim for deduction as revenue expenditure of a sum of Rs. 3,21,485 representing unabsorbed revenue expenditure incurred on account of its rail coach division. The court held that BEML paid the amount towards unabsorbed expenses incurred by HAL for the development of various models of integral coaches, and this payment should be allowed as a deduction in the relevant year for the purpose of its business. The question was answered in the negative and in favor of the assessee. Issue 3: Jurisdiction of the Tribunal regarding enhancement of assessment The Tribunal directed the AAC to reconsider the ITO's request for enhancement of assessment in respect of the technical assistance fee of Rs. 4,79,750 paid by BEML to WABCO collaborators for the assessment year 1965-66. The court held that the technical assistance fee paid by the assessee is a revenue expenditure, and thus, the question was answered in the negative and in favor of the assessee. Issue 4: Deduction of Rs. 18,53,023 as revenue expenditure The Tribunal disallowed the assessee's claim for deduction in full of the revenue expenditure of Rs. 18,53,023 representing the payment made to HAL on account of its Earth Mover Division. The court held that the payment made towards technical assistance fee must be regarded as revenue expenditure, following the Full Bench decision in Mysore Kirloskar Ltd. v. CIT. The question was answered in the negative and in favor of the assessee, with a modification that the amount paid for training officers was reasonable and not seriously disputed. Issue 5: Alternative claim of Rs. 3,59,510 on an amortized basis Since the court held that the technical assistance fee is revenue expenditure, the question relating to the alternative claim of the assessee for deduction of the sum of Rs. 3,59,510 on an amortized basis need not be answered. Issue 6: Depreciation allowance on technical assistance fee The Tribunal directed depreciation allowance on the cost of drawings, patterns, designs, etc., on the basis that they are "plant" within the meaning of s. 32 of the Act. The court held that the technical assistance fee paid to WABCO collaborators should be considered as revenue expenditure, and thus, this question does not call for an answer. Conclusion: The Tribunal will suitably modify the order, and no order as to costs was made.
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