ITAT was justified in law in holding that the amount of Rs. 63,46,000 paid by the assessee for acquiring technical know-how was allowable as revenue expenditure? The Tribunal was justified in its opinion that the payment made in question was allowable as revenue expenditure and not as capital expenditure allowable for deprecation under Section 32 of the Act .
IN THE HIGH COURT OF DELHI AT NEW DELHI
{ ITA 16 of 2008, ITAs 1011/2007, 107/2009, 293/2010, 840/2010 & 839/2010}
Judgment Reserved on: 14th September, 2010
Judgment Pronounced on : 08th October, 2010
(1) ITA 16 OF 2008
THE COMMISSIONER OF INCOME TAX . . . APPELLANT
THROUGH: Ms.Prem Lata Bansal, Advocate
VERSUS
DENSO INDIA PVT. LTD. . . .RESPONDENT
THROUGH: Mr. M.S. Syali, Sr. Advocate with Mr. Satyen Sethi, Ms. Mahua Kalra, Mr. Sumit K. Singh and Ms. Tunsal Syali, Advocates.
(2) ITA 1011 OF 2007
THE COMMISSIONER OF INCOME TAX . . . APPELLANT
THROUGH: Ms.Prem Lata Bansal, Advocate.
VERSUS
M/S BHARAT SEATS LTD. . . .RESPONDENT
THROUGH: Mr. M.S. Syali, Sr. Advocate with Mr. Satyen Sethi, Ms. Mahua Kalra, Mr. Sumit K. Singh and Ms. Tunsal Syali, Advocates.
(3) ITA 107 OF 2009
THE COMMISSIONER OF INCOME TAX . . . APPELLANT
THROUGH: Ms.Prem Lata Bansal, Advocate.
VERSUS
M/S BHARAT SEATS LTD. . . .RESPONDENT
THROUGH: Mr. M.S. Syali, Sr. Advocate with Mr. Satyen Sethi, Ms. Mahua Kalra, Mr. Sumit K. Singh and Ms. Tunsal Syali, Advocates.
(4) ITA 293 OF 2010
THE COMMISSIONER OF INCOME TAX . . . APPELLANT
THROUGH: Ms.Prem Lata Bansal, Advocate.
VERSUS
M/S BHARAT SEATS LTD. . . .RESPONDENT
THROUGH: Mr. M.S. Syali, Sr. Advocate with Mr. Satyen Sethi, Ms. Mahua Kalra, Mr. Sumit K. Singh and Ms. Tunsal Syali, Advocates.
(5) ITA 840 OF 2010
THE COMMISSIONER OF INCOME TAX . . . APPELLANT
THROUGH: Ms.Prem Lata Bansal, Advocate.
VERSUS
M/S BHARAT SEATS LTD. . . .RESPONDENT
THROUGH: Mr. M.S. Syali, Sr. Advocate with Mr. Satyen Sethi, Ms. Mahua Kalra, Mr. Sumit K. Singh and Ms. Tunsal Syali, Advocates.
(6) ITA 839 OF 2010
THE COMMISSIONER OF INCOME TAX . . . APPELLANT
THROUGH: Ms.Prem Lata Bansal, Advocate.
VERSUS
M/S BHARAT SEATS LTD. . . .RESPONDENT
THROUGH: Mr. M.S. Syali, Sr. Advocate with Mr. Satyen Sethi, Ms. Mahua Kalra, Mr. Sumit K. Singh and Ms. Tunsal Syali, Advocates.
Coram: Mr. Justice A.K. SIKRI and Ms. Justice REVA KHETRAPAL
J U D G M E N T
A.K. SIKRI, J.
1. The issues involved in all these appeals are of identical nature. The Counsel for the parties are agreed that the issues involved in ITA 16/2008 should be considered and the legal position in that case would govern the other appeals as well.
2. The respondent assessee is engaged in manufacturing and sale of auto electrical products such as Starters, Alternators, Wiper Motors, CDI, Magnetos etc., for four wheeler and two wheeler. The assessee company is promoted primarily by two Japanese Companies which are M/s Denso Corporation, Japan and M/s Sumitomo Corporation, Japan. These two companies had share holding 47.93% and 10.27% respectively. Even M/s Sumitomo Corporation, Japan is an associate company of M/s Denso Corporation, Japan. Thus, these two companies have an overall share holding of 58.20% which is sufficient to exercise overall management and control over the assessee company. However, that is not a relevant consideration for the issue involved in the instant appeal.
3. Here, we are concerned with the assessment year 2001-02. For this year, the respondent assessee had filed return declaring income at Rs. 14,77,51,457/-. During the assessment proceedings, the Assessing Officer noticed that the assessee had deposited Rs. 371.60 lacs on technical know-how fees. In addition, the assessee had also made payment of Rs. 77,03,487/- for the knowhow taken as part of the plant and machinery. The break-up of the entire know how fee paid is as under:-
