Deduction for technical knowhow cannot be allowed to trading company as it could not be said to have received any technical know how

The assessee had paid a sum of Rs. 2 crores to M/s. Procter & Gamble India Ltd (PGI) towards technical know how fees in assessment year 1994-95. The assessee had amortized the expenditure over a period of six years and claimed deduction of Rs. 33,33,333/- being 1/6th of the payment during the year. AO noted that the assessee was only a trading company and not a manufacturing company and therefore it could not be said to have received any technical know how from PGI and accordingly disallowed the claim. IN THE INCOME TAX APPELLATE TRIBUNAL “F Bench, Mumbai Before  Shri R.V.Easwar, Presi...