1982 (6) TMI 22

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....sociation of the assessee company was a permissible revenue deduction ? (2) Whether, on the facts and in the circumstances of the case, the Technical Services Fee of Rs. 17, 098 paid by the assessee to M/s. Wyman Gordon Co. Ltd. of U.S.A. was allowable as revenue expenditure ? " As far as the first question is concerned, it is common ground that it is concluded in favour of the assessee by the decision of the Division Bench of this court in CIT v. Elphinstone Spinning and Weaving Mills CO. Ltd. [1975] 100 ITR 139. We, therefore, have to really consider only the second question referred to us. The relevant facts, as far as the second question is concerned, are as follows : The assessee entered into two separate agreements, both d....

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....such approval could not be taken for granted. (5) The assessee was required to treat such technical information as confidential. The assessee had not purchased any technical information outright, but it merely acquired the right to draw upon the technical knowledge of the collaborator for the period of the agreement. Each of the agreements was to enable the assessee to commence and continue the manufacture in India of forgings and castings specialised in by the American Company. " In the financial year relevant to the assessment year 1963-64 the assessee paid an amount of Rs. 17,089 under the said agreement to the American Company and claimed it as a revenue deduction. The ITO disallowed this claim, inter alia, holding that the said e....

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....urrent and entirely dependent on the actual manufacture and sale by the assessee. (6) That the American Company was merely supplying technical information to the assessee to enable it to carry on business in terms of the agreement, and the payment could not be regarded as the purchase price of any asset. " On the basis of these conclusions, the Tribunal held that the assessee was entitled to claim the said amount of Rs. 17,089 as a revenue deduction. It is from this decision of the Tribunal that the aforesaid question has been referred to us. The contention of Mr. Joshi, learned counsel for the Commissioner, is that the payment of Rs. 17,089 was made by the assessee to the American company for acquiring an asset of an enduring valu....