9911796707
TMI Blog1989 (6) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... une, 1979, the 3rd instalment was payable upon the commencement of the commercial production of licensed machine and that the production started on in the year 1982 relevant to the asst. yr. 1983-84 only. (iii) On the facts and in view of the circumstances of the case of CIT (A) erred in disregarding the fact that the liability of the 3rd instalment did not arise during the previous year relevant to the asst. yr. 1980-81. 2. The brief facts relating to the aforesaid grounds of appeal are stated here under. 2.1 M/s Calico Industrial Engineers is a firm engaged in engineering industry manufacturing various types of machines. It entered in to a technical collaboration agreement dt. 18th Jan., 1979 with M/s Polytype Ltd. For a short pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken on the record of the Govt. of India Ministry of Industry. Sw.Fr. 50,000 (b) Against the transfer of the aforesaid initial know how Sw.Fr. 50,000 (c) Up on the commencement of the commercial production of the licensed machines. Sw. Fr. 50,000 Provided that in the event of the Agreement being terminated prior to the expirty of its stipulated duration for any reason whatsoever, the license or shall not be liable to refund any part of the said amount that may have already been received by it. The lump sum payment of Sw. Fr. 1,50,000 will be subject to applicable India taxes. 2.4. The assessing authority after obtaining directions from IAC under s. 144A accepted the assessee's contention that the aforesaid amount of technical k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact of that such liability may have to the discharged at a future date. The CIT (A) relying upon the judgements of various High Courts referred in para 4 of his order held that the disallowance of Rs. 2,55,000 made by the assessing authority under the head technical know-how fees deserves to be deleted. 3. The learned Departmental Representative vehemently contended that the CIT(A) had erred in deleting the aforesaid disallowance of Rs. 2,55,000 as the accrual of the liability for the payment of know how fees amounting to Sw. Fr. 50,000 (equivalent to Rs. 2,55,000) will accrue only upon the commencement of the commercial production of the licenced machines. The learned Departmental Representative therefore, submitted that the disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR (SC). 5. We have carefully considered the rival submissions made by both the sides. It is an undisputed fact that the assessing authority had accepted the fact that the liability for payment of lump sum technical know how fees of the Rs. 7,65,000 is an expenditure of revenue nature. Such finding has been given by him after obtaining necessary directions from the IAC under s. 144A. Thus there is no dispute about the revenue nature of the aforesaid technical know how fees claimed by the assessee as a deduction for computing the taxable income The agreement dt. 18th Jan., 1979 executed by the assessee with the foreign collaborators clearly reveals that he assessee agreed to pay initial know-how fees to the tune of Sw. Fr. of 1,50,000 (eq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year with similar accrual of liability in the following four years. Clause 5 clearly provides for consideration of Rs. 1,00,000 for what the German collaborators are supposed to provide to the assessee bearing in mind the system of accounting followed by the assessee. It has to be concluded that the entire amount of Rs. 1,00,000 was deductible in this year. As we have revenue expenditure, we will have to uphold the Tribunal's order and conclusions contained therein in the entirety. 5.2. In vie of the aforesaid discussions, we hold that the CIT (A) rightly deleted the disallowance of Rs. 2,55,000 made by the assessing authority out of technical know how fees claimed as a deduction by the assessee. 6. In the result the appeal submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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