COMMISSIONER OF INCOME TAX Vs. WHEELS INDIA LIMITED

JUDGEMENT

(1.) THE Tribunal has referred the following question under S. 256(1) of the IT Act. "Whether, on the facts and circumstances of the case, the Tribunal was right in law in holding that the entire payments made to Dunlop Rim and Wheel Ltd. under the collaboration agreement constituted revenue expenditure and allowable accordingly -

(2.) THE assessee -company carries on business in the manufacture of wheels for trucks, tanks and tractors. The reference relates to asst. yrs. 1963 -64 to 1970 -71. In each of these years, the assessee claimed payments made to its collaborators, Dunlop Rim and Wheel Ltd., U.K. The ITO disallowed a portion of the payment for the reasons mentioned by him in the order for the asst. yr. 1963 -64. The assessee appealed to the AAC who, by a consolidated order for all these years, upheld the assessee's claim. In his view, the technical aid fees paid by the assessee to the foreign company was for the user of the technical knowledge and information and the assessee had not acquired a proprietary right in the secret knowledge or process ; nor had the assessee acquired any asset of any enduring nature. The Department appealed to the Tribunal which confirmed the order of the AAC.

(3.) THE Commissioner has taken the matter on reference on the question already extracted.