VIRUDHUNAGAR TEXTILE MILLS LIMITED SULAKARAI VIRUDHUNAGAR Vs. DEPUTY COMMISSIONER OF INCOME TAX SPECIAL RANGE II MADURAI

JUDGEMENT

(1.) THE assessee has come up on appeal as against the order of the Income Tax Appellate Tribunal, Madras 'A' Bench, dated 22.06.2004 in I.T.A.No.1626/MDS/1998 raising the following substantial question of law:-

(2.) THE brief facts of the case are as follows:-

(3.) HEARD the learned counsel and perused the documents on record. The assessee entered into an agreement with a foreign consultant viz., Gherzi Textile Organisation, Zurich, Switzerland on 06.01.1995. The said agreement entered for finding out a potential partner for the purpose of expanding the existing business and for establishing a state of the art processing plant which could be the first in South India both to process woven and knitted fabric. Clause 1 of the agreement states that it is the intention of the assessee to establish the state of the art of processing plant which would be first in South India both to process woven and knitted fabric. Clause 2 of the agreement deals with service object. The object of the partner search is to identify suitable partner for the assessee Virudhunagar Textile Mills, who would be willing to give technical know-how and preferably buy back and market some of the future production. Clause 4 of the agreement deals with Fee expenses and payment terms. 4.1 deals with fee which reads as follows:-