TaxTMI 
TaxTMI 
2000 (7) TMI 53
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.... was legally correct in holding that the entire payment of 1,25,000 Dutch guilders was for the acquisition of patent rights by the assessee-company ?" Though the references are four in number they pertain to three assessment years, namely, assessment years 1969-70 to 1971-72, for which the relevant previous years ended on December 31 of each of the previous calendar years. The question referred and the statements of cases drawn by the Tribunal being similar for all the years, this judgment will govern all the references. Although the Tribunal's order in respect of the assessment years 1969-70 and 1970-71 does not form part of the paper book from the statement of the case pertaining to the said years we feel that the issue seems to have bee....
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....different stages. In addition to the said amount, 25,000 Dutch guilders were to be paid for know-how and consultation at specified intervals. The agreement was approved by the Government of India on February 18, 1961, 1,25,000 Dutch guilders were paid in the calendar year 1961, i.e., in the assessment year 1962-63. Besides, against two instalments of Dutch guilders 12,500, each to be paid in the calendar year 1962 and calendar year 1964, a total amount of 15,000 Dutch guilders were paid during this period. The total amount thus paid by the assessee to Mercedes came to Dutch guilders 1,40,000 equivalent to Rs. 1,88,037, but as the question suggests, we are concerned with the payment of 1,25,000 Dutch guilders. The assessee wrote off this a....
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....Officers in respect of the assessment years 1970-71 and 1971-72. Aggrieved by the said disallowance, the assessee preferred appeals to the Appellate Assistant Commissioner. Before the Appellate Assistant Commissioner it was pleaded that since the assessee was able to bring out prototypes of sample machines in September, 1967, and bulk production had commenced only in 1968, the assessee could write off the amount only after the actual production had commenced. Agreeing with the assessee, the Appellate Assistant Commissioner held that the provisions of section 35A of the Act were applicable to the assessee's case. He also held that the claim could be allowed in the relevant previous year in terms of the proviso to the Explanation to section ....
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....d be attributed towards the acquisition of the patent rights. He, thus, came to the conclusion that besides supplying patent rights, Mercedes had also furnished technical know-how and other services relating thereto, which could not be clubbed with patent rights. Holding that section 35A of the Act had no application to the case, but the assessee was entitled to relief under the Board's circular dated May 31, 1961, he allowed deduction of only 1/4th of half of the said amount as deduction in the year under reference in the light of the said circular. Against the said finding of the Appellate Assistant Commissioner, the assessee took the matter in further appeal to the Tribunal. It is not clear from the statement of the case, whether the Re....
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....cording to the Tribunal, indicated that the Government had also treated the two payments of Dutch guilders 1,25,000 and Dutch guilders 25,000 separately-the former for supply of manufacturing drawings, etc., and the latter as consideration for know-how and consultancy services. On the Revenue's moving applications under section 256(1) of the Act, references on the aforenoted question have been made. Despite service, the assessee remained unrepresented. We have heard Mrs. Prem Lata Bansal for the Revenue. Learned counsel for the Revenue has strenuously urged that though manufacturing drawings, layout specifications, catalogue or photographs may form part of a patent the process cannot be held a part of the patent. It is submitted that tech....
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....ent has to be regarded as a revenue expenditure but if, on the other hand, by making the payment the assessee acquires an asset or an advantage for the enduring benefit of its business, the expenditure may be regarded as a capital outlay. In the instant case, unfortunately, neither the agreement in question has been annexed with the statement of the case nor its terms have been fully set out in the statement or in any one of the orders of the Tribunal. We are, therefore, handicapped in examining the agreement as a whole. What we have before us is the afore-extracted clause (6), which only provides for the quantum and the time for payment of the various amounts as consideration, for "the grant of these technical aids and rights and services....