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1 - 4 of 4 (0.16 seconds)Mysore Kirloskar Ltd. vs Commissioner Of Income-Tax, Mysore on 5 October, 1966
5. With reference to the payments made under this agreement, the question that arose for the consideration of the Income-tax Officer was whether the whole of it or a part thereof alone was liable to be allowed as deduction. The Income-tax Officer considered that 25% of the payments made could be taken as capital in nature so as to be disallowed. Accordingly, following the decision of the Mysore High Court in Mysore Kirloskar Ltd. v. Commissioner of Income-tax [1968] 67 ITR 23 (Mys), the Income-tax Officer disallowed 25% of the payments made in each of these years. It is the sums arrived at on this basis which are referred to in the questions set out already. The assessee appealed to the Appellate Assistant Commissioner contesting the disallowance of the said 25% of the total payments made in the respective years. The Appellate Assistant Commissioner allowed the assessee's claim and thereafter the matter was taken on appeal to the Tribunal by the Income-tax Officer. The Tribunal after considering the terms of the agreement came to the conclusion that the amount representing 25% of the total payments made by the assessee to the British company was also liable to be allowed as a deduction, and had been rightly allowed by the Appellate Assistant Commissioner. It is these orders of the Income-tax Appellate Tribunal that are challenged in the form of the question set out already.
Fenner Woodroffe & Co. Ltd. vs Commissioner Of Income-Tax on 25 March, 1975
v. Commissioner of Income-tax [1976] 102 ITR 665 (Mad) a similar agreement of technical collaboration came up for consideration. In that case
though there were no specific provisions like clause 4 extracted already, the
assessee was not required to return any designs or plans that had been
communicated to it. With the result, the assessee could use the technical
data and knowledge acquired even after the period of agreement and deal
with it as if it were its own assets. No doubt in clause 2, there is certain
amount of limitation on the assessee not being in a position to assign the
benefits it obtained by reason of the communication of the inventions and
designs relating to the manufacture of railway wagons. However, that
does not in any manner take the present case out of the principle laid down
in the decision of this court in Fenner Woodroffe & Co. Ltd. v. Commissioner
of Income-tax [1976] 102 ITR 665 (Mad). The assessee has acquired an
enduring benefit by this agreement. To that extent, the amount paid is
clearly capital.
Commissioner Of Income-Tax vs Sarada Binding Works on 21 September, 1973
8. We are of the opinion that the said decision has no scope for application here. We are not concerned with the acquisition of a business. We are concerned with the terms of the agreement by which the assessee has the benefit of technical know-how, which benefit it could use for eternity, as it were. Under these circumstances, we consider that the amounts disallowed by the Income-tax Officer were rightly disallowed as capital in nature and that the Appellate Tribunal was wrong in confirming the allowance as made by the Appellate Assistant Commissioner. We answer the question in the negative and against the assessee. The Commissioner will be entitled to his costs. Counsel's fee Rs. 500, one set.
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