2002 (7) TMI 41

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....360 which the assessee claimed as revenue expenditure. However, the Assessing Officer had taken it as a capital expenditure and allowed depreciation as per rules. In appeal before the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax (Appeals) has taken a view that the expenditure incurred on technical know-how is a revenue expenditure. In appeal before the Tribunal, the Tribunal decided the issue against the Revenue relying upon the decisions of the Delhi and Bombay High Courts and confirmed the view taken by the Commissioner of Income-tax (Appeals). None appeared on behalf of the assessee. Heard learned counsel for the Revenue. Learned counsel for the Revenue, Mr. Mathur, submits that the computer software is a progr....

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.... account as revenue expenditure and it was a software programme and nothing but a consultancy fee being paid to Hindustan Computers Ltd. The Assessing Officer noticed that in the agreement, nowhere is it stated that the amount has been paid for consultancy fee and in fact it is an out-right purchase of a computer programme which relates to technical know-how. It is an asset of capital nature, therefore, treating it as an asset, he allowed depreciation admissible in the rules. In appeal before the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax (Appeals) has considered the decision of the Bombay High Court in the case of CIT v. Borosil Glass Works Ltd. [1986] 161 ITR 286 and a decision of the Delhi High Court in the c....

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....igh Court has taken the view that the technical know-how is a capital expenditure and expenses incurred on technical know-how are entitled for depreciation under section 32 of the Income-tax Act, 1961. In CIT v. Elecon Engineering Co. Ltd. [1987] 166 ITR 66 (SC), their Lordships have considered the issue that in an agreement in collaboration if the assessee acquired drawings and patterns for the manufacture of worm reduction gear units and conveyor idlers they were treated as plant or machinery and held that depreciation is allowable in relation to drawings and patterns. The Department has preferred an appeal, the appeal has been dismissed by the Supreme Court. The facts on record are that the payment of Rs. 1,38,360 was not paid for ....