TaxTMI 
TaxTMI 
2017 (9) TMI 486
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.... deduction of Rs. 130.82 lacs under Section 37(1) of the Act and not under Section 35AB of the Act to the tune of one sixth of Rs. 130.82 lacs as determined by the Assessing Officer? (2) Whether the ITAT was legally justified in concluding that the expenditure incurred of Rs. 130.82 lacs is not covered by the explanation to Section 35AB of the Act?" 2] In the assessment order, the claim of the assessee to treat the expenditure incurred of Rs. 97,52,071/towards payment to M/s. M.N.Dastur & Company, Technical Consultant and Rs. 33,30,761/paid to Shougang of China towards technical knowhow, as revenue expenditure was rejected. The Commissioner of Income Tax (Appeals), Nagpur, has allowed the appeal filed by the assessee and this order is c....
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....e contained in the said agreements, the assessee was not allowed to sale or transfer the said design and technology as well as the technical documentation and drawings to any third party. As a matter of fact, the assessee company was not authorised to use the said technology and design even for the purpose of his own use except for the blast furnace to be set up under the said contract. From the perusal of the said agreements, in particular, the confidentiality/secrecy clause, it is also evident that the relevant design and technology as well as the technical documentation and drawings were to remain the property of the concerned parties and the assessee company was allowed a very restrictive use of the same exclusively for the plant which ....
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....tion of the agreements between the parties in the light of the distinction made by the Apex Court in various decisions to determine which of the expenditures should be treated as revenue expenditure or capital expenditure. In this decision of the Apex Court, it was a joint venture and the transfer of ownership of technical knowhow was absolute. It was not a running business but a new business and these are not the features which are occurring in the present case. 6] From the findings recorded by the Income Tax Appellate Tribunal, which are reproduced above, it is apparent that the acquisition of technical knowhow is by way of license for manufacture of the raw material required for the parent business of steel production. The raw material ....