Know-how - Definition / Legal Terminology - Income Tax

For the purposes of section 35AB and also defined in Explanation 4 to section 32 of the Income tax Act 1961- 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). The meaning of the term know how given in the book Law of Copyright Industrial Designs' by P. Narayanan in which it was mentioned that- know how indicated the way in which a skilled man does his job and is an expression of his individual skill and experience. The meaning of the term know how as per Advanced Law Lexicon the Law Dictionary in which the meaning of know how was given as under :- (i) Knowledge, experience and skills including technical management, scientific and financial. (ii) information, practical knowledge, techniques and skill required to achieve some 'practical end specially in industry or technology. Know how is considered as intangible property in which rights may be brought and sold. In, OECD Model Commentary (2005) the term know how was defined- as un-divulged technical information whether capable of being patented or not which is derived from experience. The word technical cannot be considered only in relation to some technology. It also relates to practical skill of a particular activity as per the Oxford dictionary. Therefore, in relation to any commercial activity, the word technical information has to be understood as information relating to practical skill of the subject. This may be the reason that in OECD Commentary (2008) the word technical has been dropped and the term 'know-how' has been defined as undivulged information of industrial, commercial or scientific nature arising from previous experience which has practical application in the operation of an enterprise. Thus, even adopting the OECD model interpretation, any information of industrial, commercial or scientific nature arising from past experience which is a confidential information whether patented or not has to be considered as know-how. (DE BEERS UK LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX (INTL. TAXATION) -1(2)- 2011 (11) TMI 483 - ITAT MUMBAI )