9911796707
TMI Blog2007 (3) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... ". The aforesaid amount was paid to NIIT Ltd., New Delhi in pursuance of the agreement dated February 10, 1995. According to the Revenue, the sum so paid, being a fee, is in the nature of capital expenditure and the assessee to have debited only 1/6th of the above sum in the profit and loss account in terms of section 35AB of the Act and the balance should have been spread into subsequent five years. 3. The assessee had started a computer training centre in collaboration with NIIT Ltd., New Delhi. Pursuant to the agreement dated February 10, 1995, the assessee had to give a technical know-how fee to M/s. NIIT Ltd. The assessee paid the technical know-how fee in terms of the agreement for getting technical assistance from NIIT Ltd. in the field of processes, practices, techniques, procedures relating to site selection and evaluation, architectural plans and drawings, equipment specifications, assistance in selection of marketing and technical staff, support during the launch of operation etc. scheduling and administering education and methods and procedures of examining the standards attained by students, on-going marketing and technical support, special methods of using certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Before considering the arguments canvassed by learned counsel for the appellant, it would be profitable to refer to the Explanation to section 35AB of the Act. The Explanation reads as under "Explanation.— For the purposes of this section, '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)." 9. Keeping in view the aforesaid Explanation, if the activities of the present assessee are taken into account then the assessing authority has not held in his assessment order that the information which is received is likely to assist in the manufacturing or processing of goods or in the working of a mine, oil well or other sources of mineral deposits, etc. The Assessing Officer in his order of assessment has taken into account the activities which are carried out by the assessee. The nature of activities carried out by the assessee is reflected in paragraphs 5 and 5.1 of the order of assessment passed by the Assessing Officer. The sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, the judgment passed by the apex court in Southern Switch Gear Ltd. [1998] 232 ITR 359 will have no application to the case at hand. 12. Learned counsel for the appellant further submitted that the apex court in Tata Consultancy Services v. State of A. P. [2004] 271 ITR 401 (SC); [2005] 1 SCC 308 has held that intellectual property is also a goods and is marketable, therefore, intellectual property such as software and medium would be covered under the definition of the words "technical know-how". The judgment so relied upon by learned counsel for the appellant relates to the case where intellectual property was under consideration for the purposes of the Sales Tax Act and also for the purposes of article 366(12) of the Constitution of India. The apex court held that intellectual property (soft ware) shall also be "goods". Therefore, for the purposes of sales tax it being goods, sales tax is chargeable. In this context, paragraphs 78, 79 and 80 of Tata Consultancy Services v. State of A. P . [2004] 271 ITR 401 (SC); [2005] 1 SCC 308 would be relevant. The apex court has held that once the provision in the statute which has a reference shall be taken into a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the provisions of the said clause." 14. The apex court in Kalawatibai v. Soiryabai , AIR 1991 SC 1581, while dealing with the principles with regard to the interpretation of statutes held in paragraph 6 that while interpreting the statute the section has to be read in its entirety as one composite unit without bifurcating it or ignoring any part of it. On the basis of the same, it is clear that a plain reading of the section and its interpretation has to be taken out with regard to the applicability and also to understand the expression of the Legislature used while enacting the law. 15. The apex court in Balasinor Nagrik Co-op. Bank Ltd. v. Babubhai Shankerlal Pandya, AIR 1987 SC 849, in paragraph 4 (page 851) held as under: "It is an elementary rule that construction of a section is to be made of all parts together. It is not permissible to omit any part of it. For, the principle that the statute must be read as a whole is equally applicable to different parts of the same section." 16. The apex court in Orient Paper and Industries Ltd. v. State of M. P . [2006] 12 SCC 468, 475; [2006] ILR (MP Series) 170 considering the earlier judgments passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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). Having regard to the nature of the Explanation to section 35AB the chargeable income or allowing a debit or not or to make the payment to be treated as a capital expenditure has to be understood with reference to the context of the legislative intent. It is not the legislative intent that the use of the words "technical know-how" for the purposes other than not covered by the Explanation would also be treated as the capital expenditure on which tax is leviable. The "technical know-how" by itself would not be enough until such technical know-how is likely to assist for the manufacturing or processing of goods. In the present case, the assessee admittedly has not been found to have indulged into the activities of manufacturing or processing of goods which could be said that such technical know-how is likely to assist the assessee with regard to the activities including any mine and other activities referred to in the said Explanation . The assessee is utilising the said technical know-how for imparting training in the com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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