COMMISSIONER OF INCOME TAX Vs. GUJARAT CARBON LIMITED

JUDGEMENT

(1.) THE Tribunal, Ahmedabad Bench, "B" has referred the following question at the instance of the CIT, under S. 256(1) of the IT Act, 1961, (hereinafter to be referred to as "the Act").

(2.) ASSESSMENT year is 1980 81 and the relevant accounting period is year ended on 30th June, 1979. Assessee, a limited company entered into a collaboration agreement for obtaining technical know how as well as various services in respect of spot technical assistance to promote sale of furnished carbon black manufactured by the assessee. Pursuant to the agreement, the assessee company paid a sum of Rs. 22.25 lacs for obtaining technical know how and this sum was capitalised by the assessee in its books of accounts. Over and above this lump sum payment, the assessee was required to make payment of royalty based on figures of sales as provided in the agreement for a period of 5 years in return for various services which were to be rendered by the collaborator.

(3.) MR . Akil Qureshi, learned counsel appearing for the applicant Revenue, and Mr. J.P. Shah, learned counsel for the respondent assessee, have been heard. We do not find any infirmity in the order of the Tribunal to take a different view of the matter for the reasons that follow.