https://www.taxtmi.com/caselaws?id=344253 The SC held that technical fees paid in five equal annual installments constituted capital expenditure, not revenue expenditure. The court found no existing business requiring improvement through technical know-how; rather, the royalty was essential for establishing the business itself. When a complete new plant with new technology and processes is created, payment for technical know-how constitutes capital expenditure. The agreement aimed to establish a joint venture manufacturing unit for automobiles and parts, involving not merely technical information transfer but comprehensive assistance for plant establishment and machinery setup. Since the technical collaboration agreement was crucial for the entire plant project's establishment and manufacturing capability, the royalty payments were capital in nature. The decision was against the assessee. en-us Fri, 09 Jun 2017 00:00:00 +0530 Tue, 09 Jun 2026 10:47:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=344253 The SC held that technical fees paid in five equal annual installments constituted capital expenditure, not revenue expenditure. The court found no existing business requiring improvement through technical know-how; rather, the royalty was essential for establishing the business itself. When a complete new plant with new technology and processes is created, payment for technical know-how constitutes capital expenditure. The agreement aimed to establish a joint venture manufacturing unit for automobiles and parts, involving not merely technical information transfer but comprehensive assistance for plant establishment and machinery setup. Since the technical collaboration agreement was crucial for the entire plant project's establishment and manufacturing capability, the royalty payments were capital in nature. The decision was against the assessee. Case-Laws Income Tax Fri, 09 Jun 2017 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=344253