COMMISSIONER OF INCOME-TAX VS WAVIN (INDIA) LTD.
1999 P T D 3162
[236 I T R 314]
[Supreme Court of India]
Present: Suhas C. Sen and S. Saghir Ahmad, JJ
COMMISSIONER OF INCOME-TAX
Versus
WAVIN (INDIA) LTD.
C. A. Nos.4912 of 1992 with 240 to 242 of 1986, decided on /01/.
rd
September, 1997. (Appeal from the judgment and order, dated June 17, 1981 of the Madras High Court in T.C. Nos.681 of 1976, 927 and 928 of 1977).
Income-tax---
----Capital or revenue expenditure---Know-how---Collaboration agreement with foreign company---Research by foreign company relating to articles produced by assessee---Assessee contributing to cost of research ---Assessee was merely given a non-exclusive and non-transferable right of user of technical information---Amount paid was deductible---Indian Income Tax Act, 1961, S.37:
Held, that, in the instant case, the expenditure was incurred to obtain benefit of research and development made by the foreign company. The technical information given to the Indian company was "non-exclusive" and "non-transferable". In other words, this was not an out and out sale of technical know-how. The assessee was merely given a non-exclusive and non-transferable right of user of the technical information. The expenditure was deductible.
CIT v. Wavin India Ltd. (1983) 143 ITR 281 affirmed.
Ranbir Chandra, B. K. Prasad, Nagpal and P. Parmeshwaran, Advocates for Appellant.
Ms. Janaki Ramachandran, Advocate for Respondent.
JUDGMENT
We have perused the order of the Tribunal and the High Court. We are in agreement with the reasons given by the High Court for holding the expenditure to be of revenue nature. The expenditure were incurred to obtain benefit or research and development made by the foreign company. The technical information given to the Indian company was "non-exclusive" and non-transferable". In other words, this is not an out and out sale of technical know-how. The assessee was merely given a non-exclusive and non-transferable right of user of the technical information. Expenditures in these facts cannot be said to be for acquisition of any asset at all. The appeals are, therefore, dismissed with no order as to costs.
M.B.A./3303/FC Appeal dismissed.