- (1.) THIS order will dispose of IT Appeal Nos. 321 and 322 of 2005, as both the appeals have been preferred by the Revenue
(2.) THE assessee in its return claimed expenditure on royalty paid to M/s Kirloskar Oil Engines Ltd. for use of technical know -how for manufacturing engines. This was not allowed by the AO, holding that the payment was in the nature of capital expenditure.
(3.) ON appeal, the CIT(A) accepted the claim of the assessee following the order of the Tribunal for the earlier years. The Tribunal observed that the assessee did not acquire ownership of the technical know -how in view of restrictive provisions of the agreement which was for a limited period. The technical assistance was directly linked to the quantum of sales. The Tribunal dismissed the appeal of the Revenue. We have heard learned counsel for the Revenue and perused the record. Substantial question of law proposed is as under : "Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal is right in upholding the decision of the CIT(A) that the payment of royalty made by the assessee company to M/s Kirloskar Oil Engines Ltd. to acquire ambit of provisions of s. 35AB of the IT Act, 1961, whereas the payment is a capital expenditure in view of the following judgments :;