COMMISSIONER OF INCOME TAX Vs. ELECON ENGINEERING COMPANY LIMITED

JUDGEMENT

(1.) THIS reference illustrates once again what a bewildering variety of questions arise for consideration under the income -tax law. The question which falls for determination in this reference is rather unusual, namely, whether drawings and patterns received by an assessee from a foreign company under a collaboration agreement can be said to be 'plant' on which depreciation is allowable under section 32 of the Income -tax Act, 1961 (hereinafter referred to as 'the Act'). It is a very debatable question which is not easy of answer and though we have taken one view which appears to us more plausible, the other view is not altogether impossible.

(2.) THE assessee is a public limited company engaged in the manufacture of elevators. The controversy in the present reference arises out of two agreement entered into by the assessee with foreign collaborators. The first is an agreement dated October 5, 1960, entered into by the assessee with Alfred Wiseman and Co. Ltd., Birmingham, and the second is an agreement dated October 7, 1960, entered into by the assessee with Spencer (Melksham) Ltd., Wiltshire. For the purposes of this reference, it would be necessary to set out only such terms of each of the said agreements as have a material bearing on the question under consideration and we proceed to do so.

(3.) IN consideration of these and other rights and privileges acquired under the agreements, the assessee undertook to pay to Alfred Wiseman and Co. Ltd., free of Indian tax a lump sum of fourteen thousand Poundss and not to disclose to any person, firm or company any 'information' given to it by the said company.