Manufacturing know-how and training expenditure was deductible, while surtax under the Companies (Profits) Surtax Act was not.

Expenditure for use of manufacturing know-how and for training personnel outside India was treated as deductible for the assessment year 1974-75, following the Court's earlier binding view and answering that issue for the assessee. Surtax payable under the Companies (Profits) Surtax Act, 1964 was held not to be allowable expenditure in computing total income, the point being covered by prior decisions of the Court and the Supreme Court and answered for the Revenue. The reference was thus disposed of by applying established authority on both questions.

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Issues: (i) Whether the amount paid for use of manufacturing know-how and training of personnel outside India was allowable as a deduction for the assessment year 1974-75. (ii) Whether surtax payable under the Companies (Profits) Surtax Act, 1964 was an allowable expenditure in computing total income.

Issue (i): Whether the amount paid for use of manufacturing know-how and training of personnel outside India was allowable as a deduction for the assessment year 1974-75.

Analysis: The controversy on this question was treated as concluded by an earlier decision of the Court, and the matter was disposed of by following that binding view.

Conclusion: The amount was allowable as a deduction, and the question was answered in favour of the assessee.

Issue (ii): Whether surtax payable under the Companies (Profits) Surtax Act, 1964 was an allowable expenditure in computing total income.

Analysis: The question was held to be covered by prior decisions of the Court and the Supreme Court, under which surtax payable under the said enactment was not deductible in computing total income.

Conclusion: Surtax was not an allowable expenditure, and the question was answered in favour of the Revenue.

Final Conclusion: The reference was disposed of by answering one question for the assessee and the other for the Revenue.

Ratio Decidendi: Expenditure for use of manufacturing know-how and related training was deductible on the facts accepted by the Court, while surtax payable under the Companies (Profits) Surtax Act, 1964 was not allowable in computing total income.

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