Collaboration payments for access to foreign R&D technical information treated as revenue expense, not purchase of know-how; appeals dismissed Payments made under a collaboration agreement with a foreign company for access to research and development and technical information were held to be ...
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Collaboration payments for access to foreign R&D technical information treated as revenue expense, not purchase of know-how; appeals dismissed
Payments made under a collaboration agreement with a foreign company for access to research and development and technical information were held to be revenue expenditure. The SC accepted the HC's reasoning that the arrangement conferred only a non-exclusive, non-transferable right to use the technical information, and did not amount to an outright sale of know-how or acquisition of any capital asset or enduring proprietary right. Since no asset was acquired and the benefit was limited to user rights, the expenditure was not capital in nature. The appeals were dismissed.
The Supreme Court dismissed the appeal, agreeing with the High Court that the expenditure was of revenue nature. The expenses were incurred for non-exclusive and non-transferable technical information from a foreign company, not for acquisition of any asset. No costs were awarded.
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