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[2008] 304 ITR 262 (DELHI) HIGH COURT OF DELHI Commissioner of Income-tax v. T. E. I. Technologies (P.) Ltd. MADAN B. LOKUR AND V. B. GUPTA, JJ. ITA. NO. 909 OF 2007 FEBRUARY 19, 2008 Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of Where assessee had entered into a joint venture agreement with TA Ltd. and EC. Ltd. to carry out manufacturing operations of CRT sockets, electronic components like TV remote control, etc., for domestic market as well as for exports, and assessee paid an amount to said companies as technical support fee, technical support fee so paid by assessee was allowable as revenue expenditure [A.Y. 2001-02]. The assessee had entered into a joint venture agreement with TA Ltd. and EC. Ltd. to carry out manufacturing operations of CRT sockets, electronic components like TV remote control, etc., for the domestic market as well as for exports. The assessee paid an amount to the two companies as technical support fee. According to the Assessing Officer, the benefit received by the assessee was of an enduring nature and, therefore, the amount paid by the assessee was treated as a capital expenditure and not as a revenue expenditure as claimed by the assessee. Held that the only service that was rendered to the assessee was in relation to the process of manufacture. Even assuming that this would give the assessee an advantage of an enduring nature, but as held by the Supreme Court in Expire Jute Co. Ltd. v. CIT [1980] 124 ITR 1, it is not every advantage of an enduring nature that can be classified as a capital expenditure. One has to take a pragmatic and commercial view of the matter and if that was done, there could be no doubt that the assessee acquired technical know-how to enable it to manufacture the products and this was more in the nature of information guidance or payment for consultancy. However in the instant case the finding given by both the Commissioner (Appeals) and the Tribunal was that all that the assessee received was technical assistance in the manufacture of the products. There was no transfer of technology or know-how, etc., which would enable the assessee to set up its plant and machinery. In…

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