- (1.) These appeals are directed against a judgment and order dated 23rd December, 2010 passed by the Division Bench of the High Court of Karnataka at Bangalore in ITA Nos. 69-70 of 2001.
(2.) The three substantial questions of law considered by the High Court were as follows:- Whether Rs. 12,24,700/- claimed as revenue expenditure by the Association of persons which was constituted by the three partners of the erstwhile firm, MGBW, can be allowed as permissible deduction in the hands of the said Association of persons under Section 37 of the Income-Tax Act, 1961, as being laid out or expended wholly and exclusively for the purpose of business of the said Association of Persons? Whether the Assessee was entitled to claim any deduction on the alleged expenditure for acquisition of patent [trademarks] rights, copyrights and know-how, in terms of Section 35A and 35AB of the Act? Whether the Tribunal had erred in directing the Assessing Officer to capitalize the value of trademarks, copyright and technical know-how by treating the same as plant and machinery and grant depreciation therein?
(3.) In its conclusion, the High Court answered the first two questions in the negative and the third question in the affirmative in favour of the Revenue and against the Assessee. While doing so, the High Court set aside the findings of the Income-Tax Appellate Tribunal (for short 'the Tribunal") and restored the order of the Assessing Officer. The relevant assessment year is 1995-96.;