1978 (7) TMI 51

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....a, Adv. JUDGMENT SATISH CHANIRA.C.J. 1. The assessee, M/s. Kumar Pharmaceutical Works, is a registered firm carrying on business, inter alia, in the manufacture and sale of saccharine. On February 6, 1961, it entered into an agreement with Heyden, a West German concern. Under this agreement, Heyden was to transmit to the assessee know-how and data for construction and operation of a plant....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....n the costs of the know-how and the data. The royalty was in reality an instalment payment of the purchase price of the technical know-how. The payment was a part payment for the acquisition of the technical knowledge. It was of a capital nature. 3. At the instance of the assessee, the Tribunal has referred for our opinion the following question : "Whether, on the facts and in the circ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....wnership of the know-how and the data. It was not merely entitled to use it only so long as it continued to pay the royalty. This was a case of acquisition and not merely user for a limited time. The assessee clearly obtained an advantage of an enduring nature. The payment for its acquisition was clearly capital in nature. 5. Learned counsel for the assessee relied upon Bombay Steam Navigation ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... capital asset. The expenditure was in nature capital. 7. The decision in CIT v. CIBA of India Ltd. [1968] 69 ITR 692 (SC) is equally distinguishable. There, one of the terms of the agreement was that upon termination of the agreement for any cause, the Ciba company would cease to use the patents and trade marks and return to the Swiss company all copies of information, scientific data or mater....