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TMI Blog2014 (11) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... activities of the assessee company and the amount has rightly been treated as taxable receipt – Decided against assessee. Technical know-how fees disallowed – Held that:- The expenses on account of technical knowhow fee have resulted in the amalgamation or expansion of the profit earning apparatus of the assessee company and clearly relate to capital field - In Alembic Chemical Works Company Limited Versus Commissioner of Income-Tax, Gujarat [1989 (3) TMI 5 - SUPREME Court] – it has held that if the expenses incurred by the assesse are in the capital field and are inextricably connected with the capital structure of the company, it would be capital in nature - the assessee has acquired technical knowhow, technical and scientific informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in distinguishing this Hon'ble Court's judgment in the case of Saurashtra Cement and Chemical Industries and concluding that earlier years expenses are not allowable in the assessment year in question, even though the liability arises for the assessment year under appeal ? (iii) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in confirming the addition of ₹ 25,68,492/on interpretation of DPCO, principles of accountancy and orders in the case of subsidiary company Synbiotics Ltd. ? (iv) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in confirming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ightly been treated by the A.O as taxable receipt. We would, accordingly, accept this ground and reverse the conclusion of the learned CIT(A) on the issue. Ground no.2 is allowed. 4. In our opinion, considering the business of the assesse-company, it can be said that the amount in question is intimately connected with the business activities of the assessee company and therefore, the amount has rightly been treated as taxable receipt. Hence, the question no.1 has rightly been decided against the assessee. 5. Insofar as question no.2 is concerned, learned counsel for the appellant relied upon the decisions rendered in Commissioner of IT v. Power Build Ltd., (2000) 244 ITR 19 (Gujarat) and in Commissioner of IT v. Ashoka Mills Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire liability was allowed in the succeeding A.Y. 1982-83. Hence, the question no.1 is answered against the assessee. 8. With respect to question no.2, learned counsel for the appellant relied upon the decision in Saurashtra Cement Chemical Industries Ltd. v. Commissioner of IT, (1995) 213 ITR 523. In our opinion, it was an amalgamated company and there is nothing on record to show that the company is liable for the amalgamated company. Therefore, the view taken by the Appellate Tribunal is proper and the judgment rendered in Saurashtra Cement s case (supra) will not apply to the present case. 9. Insofar as question no.3 is concerned, learned counsel for the appellant submitted that the issue is covered by the decision of this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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