TaxTMI 
TaxTMI 
2010 (12) TMI 534
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....onale for coming to such a conclusion. As that has not been done, we set aside the impugned order and remit the case back to the Tribunal for discussing this aspect specifically. Parties shall appear before the Tribunal on December 21, 2009." 2. Upon detailed analysis of the terms and clauses of the agreement, the Tribunal vide aforementioned order dated 12.12.2008 vide para 2.4 had returned a finding that the assessee vide aforementioned agreement had obtained assistance in pre-order phase as well as post-order phase from the SO. The consideration was fixed on the basis of contract value of the order receipt. The agreement was to remain in force for a large period of ten years. The assessee could file, with the prior consent of the SO, an application with the Indian Patent Agency with respect to any new invention, patent and design without any financial obligation on the part of the assessee. After the expiry of the agreement on the lapse of ten years, the assessee could use technical information, improvements and patents etc. free of charge for a period of ten years and thus, it was clear that residuary benefit was available to the assessee for use of the technical know....
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.... the learned AR that if the facts of the case of the assessee are seen in the light of various judicial pronouncements including the decisions of Hon'ble Jurisdictional High Court, the expenditure claimed by the assessee would fall within the category of revenue expenditure. He, therefore, submitted that it may be observed by the Tribunal that the nature of the expenditure claimed by the assessee is revenue in nature. 6. We have heard both the parties on this issue. There is no dispute so as it relates to the determination of facts. We do not find any force in the claim of the learned AR that expenditure in their entirety should be held to be revenue expenditure for more than one reason. Firstly; the assessee was not an appellant before the Hon'ble High Court, therefore, principally, the assessee had accepted the order of the Tribunal and therefore, it was an accepted position by the assessee that to the extent the Tribunal has held that expenses claimed were capital in nature, the assessee did not have any grievance. Secondly, their Lordships of Hon'ble Delhi High Court after analyzing the terms of the agreement in the case of the assessee as well as in the case of South....
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....t. Likewise, SO will inform CS of any job in India coming through directly or indirectly or through other Contractors. Simultaneously, the Parties would advise each other on proposed method of making offer, i.e. jointly and/or severally and arrive at a mutually acceptable mode of operation. 3-3 Where there is an international enquiry from a non- Indian direct customer for SO, the manner of working would be: 3.3.1 *PROPOSAL : made by SO, including a non-Indian manufacturing (customer's request). *ORDER : to SO *ENGINEERING : SO *MANUFACTURING : SO *DELIVERY : FOB European Port or CIF *ERECTION : SO Supervision if requested. Possibility to involve CS paid by SO. 3.3.2 *PROPOSAL : made by SO, including an Indian manufacturing (CS would make an offer to SO). *ORDER : to SO *ENGINEERING : SO (if CS involvement is established it will be paid to CS by SO). *MANUFACTURING : CS controlled and paid by SO and a possible part coming from SO. *DELIVERY : CIF for the SO possible part, at site for the CS part. *ERECTION : SO Supervision if requested. Possibil....
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....ices or CS are required to seek the same by their customer, the same would be paid for on the basis of minimum manhours SO require to provide such service. SO would convey the estimate in advance. The assistance/services may be of following nature: a) Vetting of all design calculations and drawings prepared by CS. b) Making drawings and providing designs with support calculations. c) Advising and assisting in conducting type tests by way of approval of test element drawings/designs and calculations and routing advise on precautions to be taken. d) Material specifications if required to be reconfirmed by CS. e) Any other technical assistance by way of advise/standard/exemplary drawings, designs and data to enable them to execute the order. 5.3 The Technical Assistance by SO as aforesaid shall, however not include visits of SO personnel to monitor CS manufacturing or supervision at site of the Customer. Such visits, as required shall be paid for by CS as per Article 8.1(c). 5.4 The Technical Assistance by SO as aforesaid shall not include the making of detailed drawings for CS or for the customer unless specificall....
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....ng services and assistance requested by CS, to be performed by SO, as per Articles 3.4, 4.3 and/or requested as per Article 5.2(i.i) and (5.4) CS shall pay SO for such services and assistance. 8.2 SO will not be obliged to perform any service unless SO has received CS commitment to pay for it. 8.3 According to the Indian Law, if the liability to pay taxes lies with SO, CS shall be free to deduct such taxes at source on behalf of SO from all payments made under this Agreement and submit a Tax Receipt Certificate for all such sums deducted as tax at source. 8.4 SO will inform, at the beginning of every calendar year, the man hour costs for services to be contracted in that year and those rates shall remain valid for such contract Article 5.2(i.i). 8.5 Compensation to CS In case of contracts under Article 3.3, if, and only if, CS commercial assistance is requested by SO, a commission of 2.5% shall be payable to CS to be computed on the net contract value, FOB European Port excluding any cost of items and/or services from CS as the case may be. 9 - DURATION and TERMINATION The commitments entered into by the Parties ....
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....se the information and patent rights of CS furnished to them under this Agreement free of charge. 12.4 In the event of prior termination of this Agreement under Article 9, CS undertakes to stop using the technique and the authority granted by SO under this Agreement." 9. It can be seen from the above clauses that the assistance provided by SO to CS was very vast in nature. The assistance so described in the agreement was not restricted merely for the purpose of production during the subsistence of the agreement but had provided enduring benefit to the assessee in so many ways. We have to bifurcate the assistance so provided into two parts - one relating to assistance made available for the process of production during the subsistence of the agreement and another part of the assistance which provided enduring benefit to the assessee and then to weigh the proportion thereof in respect of capital and revenue expenditure. 10. So as it relates to SO assistance for 300 MW projects and above provided to the assessee as per the terms of clause 5 of the agreement, it can be seen that the said assistance is on the stage of pre-order and post-order. This assistan....