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4. In these appeals, the substantial questions of law (i) to (iv), referred supra, are entwined and they are dealt with together. From a reading of the said substantial questions of law, the core question that arises for consideration is When the two technical collaboration agreements dated 24.5.1989 and 8.12.1993 do not provide for any lumpsum payment, whether the payment of royalty by the assessee should be treated as cost of technical know-how, which would fall under Section 35AB of the Income Tax Act? 5.1. To decide the above issue, let us briefly traverse the relevant facts of the present case. The respondent/assessee is engaged in the manufacture of automobile parts and components. They entered into Technical Collaboration Agreement dated 7/24.10.1986 with a Japanese company, namely, Arai Seisakusho Co. Ltd. As per the said agreement, the assessee was granted exclusive license to manufacture and sell the entire range of reed valves. The said agreement was valid for a period of ten years. Article 7(1) of the said agreement stipulates the manner in which payment should be made by the assessee to the Japanese company and for better clarity, the Article 7(1) is extracted hereunder:

5.4. Thereafter, on 8.12.1993, another Technical Collaboration Agreement was entered into between the very same parties for grant of license to manufacture and sell the entire range O' Rings, Oil Seals, Moulded Rubber Parts, Reed Valve Assemblies and for this, payment terms are set out under Article 7(1) of the said agreement, which reads as under:
Article 7. Technical License Fee:
1. In consideration of the right and license granted under this Agreement, HI-TECH shall further pay to ARAI the running royalty of five per cent (5%) for a period of five (5) years from the commencement of production effective date of this agreement calculated on the ex-factory price of products, net of excise duties minus the cost of standard bought-out components and landed cost of imported components manufactured by HI-TECH. This royalty payment will be subject to Indian Taxes. The payment made in terms of the above article was also accepted by the Department as revenue expenditure in terms of Section 37 of the Act.
5.5. Thereafter, the assessee entered into another Technical Collaboration Agreement dated 11.2.1999 with the Japanese company to continue the usage of technical know-how granted under agreements dated 7/24.10.1986 and 24.5.1989 for a further period of five years in respect of license to manufacture and sell the entire range of O' Rings, Oil Seals, Moulded Rubber Parts, Reed Valve Assemblies. In other words, this agreement renews the license granted under the agreements dated 7/24.10.1986 and 24.5.1989 for a further period of five years. Article 7(1) of the said agreement provides for payment terms and the same reads as under:
10. In our considered opinion, on facts, the decision in Jonas Woodhead and Sons (India) Ltd. case, referred supra, was rightly distinguished by the Tribunal following the decision of this Court in S.R.P.Tools Ltd. case, referred supra, as there was no setting up of a new factory based on the original Technical Collaboration Agreements or by the subsequent renewal agreements. What was sought to be renewed is only the license for manufacturing and selling the automobile parts and components, for which royalty was to be paid for the subsequent periods, after the expiry of the original period of license. We, therefore, concur with the findings of the Tribunal that the payment made in terms of the two agreements dated 24.5.1989 and 8.12.1993 is purely revenue in nature, as they provide for payment of license fee for manufacture and sale of the products which are manufactured pursuant to the first agreement dated 7/24.10.1986 and the said fact is also not in dispute. The Tribunal has at length discussed the scope of these agreements and come to the conclusion that the payments made under the Technical Collaboration Agreements are purely in the nature of revenue expenditure and not capital expenditure.