LIPI INTERNATIONAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) A reference has been made to this Court at the instance of the applicant M/s.Lipi International. The questions of law which have been referred are as under :

(2.) A few facts may now be set up. The applicant -assessee is a registered firm and in terms of Deed of Partnership was carrying on the following business :

(3.) The applicant was assessed for the assessment year 1978-79. The assessing officer came to the conclusion that the receipt is not self generated or on goodwill account since the assessee's fundamental expertise and know-how is put to use in a commercial sense as an integral part of its business. It held that the receipt is not a capital receipt nor in nature of capital gains. The income, therefore, was taxed as a revenue receipt. The applicant aggrieved preferred an appeal. The Commissioner held that the agreement is not for designing of boilers, but is for an outright sale of the technical know-how. The applicant had relied on the judgment in the case of Commissioner of Income Tax V/s. Ralliwolf Limited, 143 ITR 720. The Commissioner (Appeals) accepted the contention of the applicant that the amount of Rs.5,00,000/ received was for sale of entire boiler technology and system and does not refer to the sale profits of five models of boilers as such and as such held that the said amount of Rs.5,00,000.00 is a capital receipt.