- (1.) ON an application under S. 256(2) of the IT Act, 1961, the Tribunal has referred the following question for the opinion of this Court : "Whether, on the facts and in the circumstances of the case and on an interpretation of the technical collaboration agreement, the Tribunal was justified in allowing the payment of Rs. 2 lakhs as revenue expenditure ?"
(2.) THE assessee is a public limited company manufacturing ball-bearings. The assessment year is 1980-81. The assessee entered into an agreement styled "Technical Collaboration Agreement" with M/s Industriework Echsofflar, INA Ingenieur Disast GmbH, Federal Republic of Germany (INA). The agreement provided for the supply of technical know-how, which the INA had already developed, being in the same line of business, for as lump-sum consideration of Rs. 13 lakhs and subject to Indian tax is sold to assessee. According to cl. 7 of the agreement, the lump-sum was to be paid in the instalments as under : (a) Rs. 2 lakhs after the agreement has been taken on record by the Government of India. (b) Rs. 11 lakhs after commencement of commercial production. Assessee claims before the AO that the payment for technical know-how, which includes Rs. 2 lakhs is in the nature of revenue expenditure. The ITO did not accept the claim of the assessee. According to him, when the assessee on payment, for technical know-how under the technical collaboration agreement, acquires the benefit of enduring nature, therefore, the expenditure is a capital expenditure. In appeal before the CIT(A) the view taken by the assessee was endorsed. In the appeal before the Tribunal, the Tribunal considered the view taken by this Court in the case of CIT vs. B.N. Elias and Co. (P) Ltd. (1987) 60 CTR (Cal) 144 : (1987) 168 ITR 190 (Cal) : TC 16R.1199 and the decision of the Supreme Court in Alembic Chemical Works Co. Ltd. vs. CIT (1989) 77 CTR (SC) 1 : (1989) 177 ITR 377 (SC) : TC 16R.1277 and allowed the claim of the assessee that the expenditure was a revenue expenditure and, therefore, deduction should be allowed to the assessee in the assessment year in hand. The matter was listed for 10 times. But none appears for the assessee. Heard the learned counsel for the Revenue, Mr. Agarwal.
(3.) MR . Agarwal submits that the issue is covered by the decision of the Supreme Court in the case of Jonas Woodhead & Sons (India) Ltd. vs. CIT (1997) 138 CTR (SC) 283 : (1997) 224 ITR 342 (SC) : TC S16.1743. He further submits that the decision relied on by the Tribunal has no application as in that case the assessee was not allowed to use the technical know-how after expiry of the agreement, while in the case in hand the assessee can use the technical know-how, even after the period of the assessment.;