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of <h1>Assessee's Payment for Technical Fees Upheld by ITAT</h1> <h3>First Income-Tax Officer. Versus Kakad Gas Service.</h3> The ITAT Bombay-B upheld the AAC's decision that the payment of Rs. 60,000 by the assessee to Cambatta Industries was for technical fees and not for ... Capital Or Revenue Expenditure Issues:1. Whether the payment of Rs. 60,000 by the assessee to Cambatta Industries for surrendering their Burshane gas distributionship agency was expenditure of a revenue nature or technical fees.2. Whether the AAC erred in holding that the payment was for technical fees and not for acquiring the agency.3. Whether the ITO's disallowance of Rs. 60,000 was justified.Detailed Analysis:Issue 1: The main issue in this case was whether the payment of Rs. 60,000 by the assessee to Cambatta Industries was expenditure of a revenue nature or technical fees. The ITO disallowed the payment, considering it as goodwill or for acquiring a capital asset. However, the AAC held that the payment was for technical fees as the business required technical assistance and regulations to be observed. The AAC also noted that the ITO did not provide a clear basis for disallowance, leading to the departmental appeal.Issue 2: The second issue revolved around the correctness of the AAC's decision that the payment of Rs. 60,000 was for technical fees and not for acquiring the agency. The department argued that no technical assistance was provided by Cambatta Industries, and the expenditure was for a capital asset, citing relevant case law. On the contrary, the assessee's representative supported the AAC's decision, emphasizing that the burden of proof lay with the department to show that the payment was not for technical fees.Issue 3: The final issue was whether the ITO's disallowance of Rs. 60,000 was justified. The ITAT Bombay-B, after considering the arguments from both sides and reviewing the evidence on record, found that the business had not changed hands, and the payment was indeed for technical fees. The Tribunal noted that the ITO's reasoning lacked a solid basis and upheld the AAC's decision. The Tribunal dismissed the departmental appeal, affirming the order of the AAC.In conclusion, the ITAT Bombay-B upheld the AAC's decision that the payment of Rs. 60,000 by the assessee to Cambatta Industries was for technical fees and not for acquiring the agency. The Tribunal found no merit in the ITO's disallowance and dismissed the departmental appeal, emphasizing the lack of a substantiated case for disallowance.
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