2009 (9) TMI 159

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.... 15 per cent. of the actual cost of addition of a new machinery under section 32(1)(iia)) of the Income-tax Act, 1961 (for short, the "Act"). The Assessing Officer (AO) did not dispute that there was an addition of new machinery. However, he disallowed the claim of additional depreciation only on the ground that in the original return filed by the assessee, the assessee had not furnished Form No. 3AA. This decision of the Assessing Officer was reversed by the Commissioner of Income-tax (Appeals) on the ground that even the revised return was filed within the limitation period and, therefore, this could not be a ground for disallowance. The Income-tax Appellate Tribunal has upheld the order, and rightly so, inasmuch as a very hyper-technical....

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....h was treated as revenue expenditure by the assessee. The Commissioner of Income-tax (Appeals) found that as per the agreement, this royalty was running royalty payable every year, which depended upon the number of pieces produced of the aforesaid products, namely, catalytic converter and exhaust muffler. 4. We are of the opinion that this finding of the Commissioner of Income-tax (Appeals), as approved by the Income-tax Appellate Tribunal, is a finding of fact which is rightly arrived at as expenditure is purely a revenue expenditure, which is annual expenditure depending upon the quantum of production in the relevant year. 5. In CIT v. J. K. Synthetics Ltd. [2009] 309 ITR 371 (Delhi), after elaborately discussing the entire case law on ....

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....nature ;" 6. In the present case, on facts, it was, inter alia, found as follows: "(a) in that case the grant of technical aid was for setting up of the factory combined with the right to sell products while in our case our company is already producing exhaust systems and the technology agreement was not for setting up of the factory. (b) in the cited case the foreign company who gave the technology agreed not to manufacture similar products in India while there is no such regulation in our agreement. (c) in the cited case the technical knowledge obtained was held to give an advantage of enduring nature to the assessee-company and as it had the right to continue to manufacture the product even after termination of the agreement. Whil....