COMMISSIONER OF INCOME TAX Vs. KIRLOSKAR CUMMINS LIMITED

JUDGEMENT

(1.) BY this reference under S. 256(1) of the IT Act, 1961, made at the instance of the Revenue, the Tribunal has referred the following question of law to this Court for opinion :

(2.) THE assessee is a public limited company engaged in the manufacture and sale of oil engine etc. The assessment year under reference is 1973 74, the relevant previous year being year ended 30th Sept., 1972. In the above previous year, the assessee paid to one M/s Cummins Engine Company incorporated in USA ('Cummins') an amount of Rs. 20,79,513 as consideration for the following services :

(3.) THE assessee took the matter further by way of second appeal to the Tribunal. The Tribunal, on a detailed examination of the terms and conditions of the collaboration agreement and the case law on the subject, held that the entire expenditure of Rs. 20,79,513 (and not 1/4 thereof, as held by the ITO and the AAC) constituted revenue expenditure. Hence, this reference at the instance of the Revenue.