TaxTMI 
TaxTMI 
2010 (12) TMI 612
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.... undoubtedly is of capital nature. 3. In the facts and circumstances of the case, the ld. CIT(A) has erred in law and on facts by deleting addition of Rs.6,41,250/- made by the AO on account of capitalization of 'Repair and Maintenance Expenses' which included expenditure incurred on erection of 'Secure Land Fill Systems (SLFS), ignoring the fact that the expenditure allowed enduring benefit over a period of years to the assessee." 2. Apropos ground No.1, during the year, the assessee claimed depreciation @ 60% on computer accessories and peripherals, namely, UPS, Scanner. Printers, etc. The AO held that only computer and software are eligible for depreciation @ 60% and that computer accessories and printers are not eligible for depreciation at this rate. The AO thus restricted the claim of the assessee for depreciation on computer peripherals @ 25% and made a disallowance of Rs.1,52,896/-. 3. The learned CIT(A), by virtue of the impugned order, directed the AO to allow depreciation @ 60% on computer accessories and peripherals. It was observed that in the assessee's case for assessment years 2003-04 and 2004-05, such claim of the assessee had been all....
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....IT [101 Taxmann 171(Delhi)] 5. ITO v. Samiran Majumdar [280 ITR 74, 2001, ITAT (Calcutta)] ; 6. CIT v. Karnataka Power Corporation reported in 247 ITR 268; 7. ITO v. Samiran Majumdar, 98 ITD 119 (Kolkata); 8. DCIT v. Surface Finishing Equipment (2004) 2 SOT 233(Jodh); 9. Expeditors International (India)(P)Ltd. v. Addl.CIT 118 TTJ 652. 7. The facts remaining the same herein also, in keeping with the aforesaid Tribunal order in the assessee's case for assessment years 2003-04 and 2004-05, this issue for the present year is also similarly remitted to the file of the AO, to examine as to whether the computer peripherals could be used independently or not and to decide the issue of depreciation, keeping in mind the directions issued by the Tribunal, as aforesaid. 8. Coming to ground No.2, the assessee company had debited 55,03,285/- as royalty in its profit and loss account. Observing that it was in the nature of technology transfer, the AO queried the assessee as to why this royalty paid be not treated as capital in nature. 9. The assessee contended that it had entered into a Technical Collaboration Agreeme....
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....d was not permitted to sub-licence the rights under the agreement; that the agreement did not confer any proprietory rights on the assessee concern with regard to technology to VGTI; and that since under the agreement, the assessee merely acquired the limited right to use the technical know-how/information and no title thereto, the payment of technical know-how fee is allowable as a deduction. In this regard, the learned counsel has placed reliance on the following case laws:- 1. CIT v. Ciba India Ltd., 69 ITR 692(SC); 2. Alembic Chemical Works Co. Ltd. v. CIT, 177 ITR 377(SC); 3. CIT v. Indian Oxygen Ltd., 218 ITR 337(SC); 4. CIT v. Wavin (India) Ltd., 236 ITR 314(SC); 5. Shriram Refrigeration Industries Ltd. v. CIT, 127 ITR 746(Del); 6. Triveni Engineering Works Ltd. v. CIT, 136 ITR 340(Del); 7. Addl. CIT v. Shama Engine Valves Ltd., 138 ITR 216(Del); 8. CIT v. Bhai Sunder Dass and Sons P. Ltd., 158 ITR 195(Del); 9. CIT v. Tata Engineering and Locomotive Co. Pvt. Ltd. 123 ITR 538(Bom); 10. CIT v. Avery India Ltd., 207 ITR 813(Cal); 11. Bajaj Tempo Ltd. v. CIT, 207 ITR 101....
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....assessee's case. Therein, there was a composite payment for supply of technical know-how and services for setting up plant and manufacturing of products. These are not the facts herein. Therefore, 'Jonas Woodhead and Sons (India) Ltd. v. CIT' (supra), is not applicable. 17. Regarding 'CIT v. Shriram Bearings Ltd.' 251 ITR 155(Cal), firstly, in view of the Delhi High Court decision (supra) in the case of the assessee itself, 'Shriram Bearings Ltd.' is of no help to the Department. Secondly, therein also, the facts were different. There was a Collaboration Agreement between the assessee and a foreign company. Payment was made for supply of technical know-how. The assessee was allowed to use technical know-how even after the period of agreement. It was in these facts that it was held by the Hon'ble Calcutta High Court that there arose a benefit of enduring nature to the assessee. Evidently, these are not the facts before us. 18. In view of the above, respectfully following the decision of the Hon'ble Delhi High Court in the case of the assessee (supra), ground No.2 raised by the Department is rejected. 19. So far as regards ground No.3, the assessee debit....
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....n compliance of statutory requirement, has been held to be an allowable revenue expenditure. Reliance in this regard has been placed on 'CIT v. Sakhi Textiles Ltd.' 250 ITR 449(Mad), 'CIT v. Steel Complex Limited', 238 ITR 1054(Kerala), 'Hindustan Electro Graphites Ltd. v. CIT' 218 ITR 688(MP-HC) and 'Zenith Steel Pipes Limited v. CIT' 185 ITR 126 (Bom-HC). 24. The factum of the expenditure having been incurred by the assessee in compliance of Water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention and Control of Pollution) Act, 1981 and the Hazardous Waste (Management and Handling ) Rules, 1989, has nowhere been disputed by the Department. Once the Hazardous Waste was an effluent/bye product of the management process of the assessee, provision therefor was of necessity to be made by the assessee . Else, it would have been well nigh impossible for the assessee to carry on its business. 25. In 'Sakhi Textiles Ltd.'(supra), relied on by the ld. CIT(A), it has been held that protection of health of the workmen was the basis for installation of carding machines, the expenditure incurred on installation of the carding machine was to be treated as r....