9911796707
TMI Blog1998 (3) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 1974-75. The assessee is a manufacturer of cranes. It had, in response to a tender, floated by the Cochin shipyard offered to design, manufacture, supply and erect crane of 150 tonnes capacity. The petitioner had not manufactured a crane of that capacity earlier and the purchaser, Cochin shipyard, having insisted upon the petitioner involving a reputed foreign crane manufacturer at all stages from the stage of design to the time of erection. The petitioner entered into an agreement with a German company for obtaining design and drawings, as also for the supervision in India of the manufacture and of the erection of the crane at the Cochin shipyard. The agreement so entered into sets out the fact that this is a one time arrangeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacture and also erection, directly by you so that the entire responsibility is taken by Chitram." In the agreement between the assessee and its collaborator, their respective positions were described as general contractor and sub-supplier. The relevant part of the recitals in the agreement reads as under : "Chitram and PHB/JUCHO will process this contract. Chitram acting as general contractor and PHB/JUCHO as sub-supplier for the engineering and for the assignment of supervising staff for the fabrication in India as well. Supervising of the fabrication in India does not relieve Chitram from its responsibility for the proper operation of the items supplied by them." It is clear from a perusal of the terms of the agreement, a copy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for the purpose of executing a single order and the supply from the foreign collaborator was secured at the instance of and for the benefit of the purchaser, who had insisted upon the same. An expenditure, which is of revenue nature cannot be treated as otherwise, by speculating on the possible user of the technical data or the design in future by the assessee. There was no evidence whatever before the Income-tax Officer or before the Tribunal to show that the assessee had commenced manufacture of 150 tonnes capacity cranes on a commercial basis, and had produced such cranes, and/or marketed them after the execution of this order, by utilising the designs and drawings provided by the collaborator. The benefit, which the assessee had secur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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