2001 (3) TMI 26

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....itions involve an identical issue and are, therefore, disposed of by this common order. I. T. R. Nos. 187 to 191 of 1980 relate to the assessment years 1971-72 to 1975-76, I. T. R. No. 266 of 1981 relates to the assessment years 1976 77 and I. T. R. No. 110 of 1981 relates to the assessment year 1977-78. The question referred, under section 256(1) of the Income-tax Act, 1961 (in short, "the Act....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ding technical know-how in its manufacturing activities. As per the terms of the agreement entered into with the said foreign concern, a sum of Rs.1 lakh was payable in the form of equity shares which were allotted to the concern. Royalty at the rate of 3 per cent. was also pay able on ex-factory selling price of the products manufactured in collaboration, for a period of ten years subject to cert....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..... The matter was carried in further appeal before the Tribunal. When the case was heard by two Members of the Tribunal, there was a difference of opinion between them. While the Accountant Member considered the amount written off each year to be allowable as revenue expenditure in the respective year, the judicial Member was of the view that the amount in question should be treated as "plant" to b....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ording to him, the judicial Officer's view was the correct one and should have been adopted. A similar question came up before the apex court in Eimco K. C. P. Ltd. v. CIT [2000] 242 ITR 659. It was held that where a foreign company gives a technical know-how and obtains equity shares in the new company, the amount attributable to technical know-how was not revenue expenditure under section 37 ....