Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1995-96 Where there was complete lack of details in respect of agreement entered into between assessee and foreign collaborator, there were no details regarding technical know-how payment and also there was no discussion by any of authorities below as to how technical know-how was revenue expenditure, matter was to be remanded to Tribunal to decide same afresh [Remanded] The assessee was a company engaged in the manufacture of textile machinery accessories like transmission belts, cots and aprons, loom components, etc. While determining the total income, the Assessing Officer disallowed the assessee's claim towards technical know-how and allowed 1/6th of the amount under section 35AB. The Tribunal held that the amount paid towards technical know-how was a revenue expenditure and allowed the entire amount claimed by the assessee. Held that, there was complete lack of details in respect of agreement entered into between the assessee and the foreign collaborator. There were no details regarding the technical know-how payment and also there was no discussion by any of the authorities below how technical know-how was the revenue expenditure. In these circumstances, the order passed by the Tribunal was to be set aside and the matter remitted back to the Appellate Tribunal, to decide the matter afresh in accordance with law. CASES REFERRED TO Alembic Chemical Works Co. Ltd. v. CIT [1989] 177 ITR 377 (SC) (para 6), CIT v. Drilcos (India) (P.) Ltd. [2004] 266 ITR 12 (Mad) (para 4), CIT v. I. A. E. C. (Pumps) Ltd. [1998] 232 ITR 316 (SC) (para 6), CIT v. JCT Electronics Ltd. [2008] 301 ITR 290 (P. & H.) (para 7), CIT v. Simpson & Co. Ltd. [1999] 239 ITR 83 (Mad) (para 6),CIT v. Southern Switchgear Ltd. [1984] 148 ITR 272 (Mad) (para 7), CIT v. Swaraj Engines Ltd. [2009] 309 ITR 443 (SC) (paras 5, 7), CIT v. Tamil Nadu Chemical Products Ltd. [2003] 259 ITR 582 (Mad) (para 4), CIT v. Warner Hindusthan Ltd. [1986] 160 ITR 217 (AP) (para 7), Fenner Woodroffe & Co. Ltd. v. CIT [1976] 102 ITR 665 (Mad) (para 7), Jonas Woodhead & Sons (India) Ltd. v. CIT [1997]…

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