1998 (4) TMI 99

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....ng aside the assessment order ?" The matter relates to the assessment year 1976-77, in which the question cropped up as to whether the assessee-company which was doing the business of manufacturing and selling electric motors, was entitled to deduct a sum of Rs. 3,25,927 as payment of royalty made to the licensor Jyoti Limited for providing it with technical know-how in the form of drawings, designs, technical documents, etc., as revenue expenditure. The Income-tax Officer allowed the claim. However, the Commissioner of Income-tax, noted that the advantage derived by the assessee-company in consideration of the payment of the said amount was of an enduring nature, which would endure even after the license agreement was over. It, therefore, ....

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....r examining the agreement and other material would be justified in passing any order which he thinks proper on the merits. The assessee's case is that the assessment order was neither erroneous nor prejudicial to the interests of the Revenue and that order of the Income-tax Officer was in conformity with the provisions of law and in accordance with the decision of this court in CIT v. Jyoti Limited [1979] 118 ITR 499, and, therefore, there was no valid ground for the Commissioner to exercise his powers under section 263 of the Act. It will be noted from article 4 of the licensing agreement that for the supply of additional design and manufacturing drawings and other information, necessary to disclose any modification and improvements ....