1997 (4) TMI 14 - SC - Income Tax

Whether the amount paid by the respondent-assessee to the foreign collaborator for technical know-how is a capital expenditure or a revenue expenditure - High Court was justified in concluding that the amounts paid to the collaborator is only a licence fee and not the price for acquisition of a capital asset . It was concluded that the entire payment constitutes revenue expenditure and the questions were answered in favour of the assessee

Summary

The Supreme Court dismissed Revenue's appeals against the Madras High Court judgment in Tax Cases, holding that the amount paid for technical know-how was revenue expenditure, not capital expenditure. The High Court concluded that the payment constituted a "licence fee" and not the price for acquiring a "capital asset." The appeals were dismissed with no order as to costs.