Tech Know-How Fees Deductible Only U/s 35AB & Not U/s 37(1): Supreme Court

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From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Tue, Sep 11, 2012 at 9:18 AM
Subject: Message from EGroup of SolapurCAs Tech Know-How Fees Deductible Only U/s 35AB & Not U/s 37(1): Supreme Court
To: editor@itatonline.org

 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.

Drilcos (India) Pvt. Ltd vs. CIT (Supreme Court)

Lumpsum technical know-how fees are deductible only u/s 35AB & not s. 37(1)

 

The assessee entered into a "Licence and Technical Assistance Agreement" with an American company pursuant to which the American company agreed to transfer technical know-how to the assessee in consideration of US $2,25,000 to be paid in three installments. The assessee paid the first installment amounting to Rs.17.49 lakhs. Subsequently, disputes arose between the contracting parties and the know-how was not transferred by the American company. The assessee claimed that as the technical know-how was not received, the amount paid was deductible u/s 37(1) and not under s. 35AB. The AO & CIT(A) rejected the claim though the Tribunal upheld it. The High Court reversed the Tribunal. On appeal by the assessee to the Supreme Court, HELD dismissing the appeal:

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Regards,

Editor,

itatonline.org

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