COMMISSIONER OF INCOME TAX Vs. JYOTI LTD

JUDGEMENT

(1.) IN this case, at the instance of the Revenue, the following two questions have been referred to us for our opinion :

(2.) ASST. yrs. 1964-65, 1965-66 and 1966-67.--Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in allowing depreciation as well as development rebate to the assessee in respect of capital expenditure incurred for acquiring drawings, designs, etc., from M/s Gilbert, Gilkes and Gordon Ltd., London ?" In order to bring out the real controversy between the parties and to focus attention of all concerned on that real controversy, we will reframe question No. 1 as follows :

(3.) THE licensee agrees to manufacture switchgears and switchboards according to the directives of Calor-Emag and to take care that the technical conditions of the parts manufactured in India correspond to those manufactured by Calor-Emag in Germany. Any deviation of the design, etc., requires the approval by Calor- Emag." Article 2 in terms provides that the licensee, that is, the assessee before us, agrees to utilise all documents, experience, etc., furnished to the licensee only by itself or for its suppliers of parts of switchgear. He further agrees to treat them as confidential and not to make such information accessible to any other party. THE licensee agrees not to enter into any agreement or contract with any other party in regard to the equipment manufactured for sale by Calor-Emag. THE licensee further agrees not to develop or manufacture its own designs of equipment which might reduce the quantity of sales or of manufacture of equipment or programme of sales of Calor-Emag. By Art. 5 of the agreement, it has been provided : "Calor-Emag agrees to furnish to licensee all information required for the production of products covered by this agreement and, in particular, design and workshop drawings, wiring diagrams, specifications and techni cal manufacturing information as mutually agreed upon to enable the licensee to manufacture products covered by this agreement. This above- mentioned things will be furnished to the licensee against the payment."