1980 (3) TMI 168

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....isallowance of Rs. 4,239 being royalty paid to Southern India Textile Research Association, Coimbatore while computing the appellant's income at Rs. 43,010 under s. 143(3) of the IT Act, 1961 for asst. yr. 1976-77. 2. The appellant had entered into an agreement on 14th Feb., 1975 with Southern India Textile Research Association, Coimbatore (hereinafter referred to as SITRA) for technical assist....

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....s in respect of such further development has to be borne by the appellant. If the process is entirely new, it can form subject matter of a separate agreement. The process was to be kept confidential by the appellant and could not be revealed to any body without the prior approval of SITRA. In consideration for the various services the appellant was to pay initially lump sum fee of Rs. 5,000 and ro....

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....visions of the agreement and the case law. He distinguished the Madras high Court decision in 110 ITR 890 where only a part of the technical fees were found to be not allowable. He claimed that the payment in appellant's case is purely for user. He also pointed out that it is based on production. On these facts he claimed that there could not be any doubt about the admissibility of the recurring p....

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....ulated period in the agreement. New developments had to be paid for separately. Even if there be any capital element of enduring advantage, this, in our opinion, should be taken to represent the lump sum payment of Rs. 5,000 and not the recurring payment of Rs. 4,239 which is in dispute before us. The payment is for the right to use the special process. It is allowable as a deduction on this groun....