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The case of Southern Switch Gears Ltd. relied upon by the ld. AO is distinguishable on facts, because in the case of Southern Switch Gears both royalty on sales and lump sum for technical aid was payable in 5 equal installments, whereas, in the instant case the assessee neither paid lump sum amount and the payment is entirely linked to the net sale.

In the instant case the appellant has not acquired any benefit of enduring nature and it will not constitute acquisition of any assets. Further by payment of royalty, the ownership right over trade mark and know how doesn't transfer to the appellant. The Appellant Company has a non-exclusive right to use the trademarks within the territory of India and the royalty is determined on the basis of percentage of turnover and is not paid as lump sum, therefore, the same can increase or decrease on the basis of turnover. It is also pertinent to note that the above expenditure has not been disallowed by the department either in the preceding AYs or in the succeeding AYs.