TaxTMI 
TaxTMI 
2010 (9) TMI 715
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....sp; 3. Since common questions of law arise in these appeals, therefore, they are being disposed of by this common order. 4. The basic facts necessary for decision of these appeals are that the asses-see entered into a technical collaboration agreement with M/s. Eisenwerk Sulzau-Werfen, Austria (hereinafter referred to as "ESW"). By that agreement the assessee was to acquire know-how from ESW against certain consideration, for the purposes of using the know-how in the business of the assessee. 5. Under the collaboration agreement the know-how was to be provided to the assessee by ESW, in consideration whereof the assessee was to pay a sum of two million Deutsche Marks (hereinafter referred as "DM") over-seas, i.e., Aus....
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....holding the aforesaid contention of the assessee and holding that no income-tax was payable on the remittances. However, the Income-tax Department went in appeal before the Income-tax Appellate Tribunal against the orders of the Commissioner of Income-tax (Appeals). Because those appeals filed by the Department were pending before the Income-tax Appellate Tribunal, therefore, the Assessing Officer refunded the income-tax deposited by the assessee along with the interest accrued on the said tax in terms of section 244A, after obtaining indemnity bonds guaranteeing redeposit of the refunded tax and interest, in case the orders of the Commissioner of Income-tax (Appeals) were reversed by the Income-tax Appellate Tribunal. 11. The Inc....
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....aid by the assessee on the foreign remittances ? (2) (b) Whether the said reversal by the Commissioner of Income-tax (Appeals) would not have the effect of disallowing the deductions, but the deductions claimed allowed and refunded would have to be added to the income of the assessee under section 41 in the year when the reversal by the Commissioner of Income-tax (Appeals) attained finality upon communication/service of the order rejecting the Department's application under section 256(1) ? (3) Whether the deductions under section 35AB were liable for prima facie adjustment contemplated under section 143(1)(a)(ii) of the Act by the Assessing Officer ? 13. So far as the first question is concerned, we find from ....
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....We hold accordingly and answer the first question as above. A reference in this connection may be made to the decision of the Supreme Court in the case of McDowell and Co. Ltd. v. CTO reported in [1985] 154 ITR 148 (SC) wherein it was held that excise duty was part of the "consideration'. Another direct decision covering the question is by the Madras High Court in the case of CIT v. Standard Polygraph Machines P. Ltd. [2000] 243 ITR 788 (Mad). 17. Before leaving this issue we may say that the words "lump sum' as used before the word "consideration' in section 35AB, only exclude periodical or turnover based payments like royalty etc., and any one-time payment for the know-how would fall within the expression "lump sum' if it is fix....
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....l by the Com-missioner of Income-tax (Appeals) attained finality only on May 17, 1999, when the order of the Income-tax Appellate Tribunal rejecting the reference application of the Department under section 256(1) was served upon the assessee. We therefore, answer the second question by holding that the deduction under section 35AB was liable to be allowed in the relevant assessment years and the refund, consequent upon the reversal of the Assessing Officer's TDS orders under section 195 by the Commissioner of Income-tax (Appeals), became liable to be added under section 41 only on and after May 17, 1999 when such reversal order attained finality to the knowledge of the assessee. This is more so because of the refund being conditional upon ....
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....is view. 20. So far as the third question is concerned, it is trite that under section 143(1)(a)(ii) prima facie adjustment is permissible only in respect of claims, the incorrectness of which is apparent from any information in the return. Debatable claims are not liable to such prima facie adjustments. We therefore, hold that the Assessing Officer was not justified in making prima facie adjustments in respect of the deduction claimed in respect of the income-tax paid by the assessee as part of the lump sum consideration for acquiring the know-how. For support to the above proposition reference may be made to the decision of the Supreme Court in the case of Kvaverner John Brown Engg. (India) P. Ltd. v. Asst. CIT reported in [2008] 305 I....