COMMISSIONER OF INCOME TAX Vs. ENGINEERING INNOVATION LTD.

JUDGEMENT

(1.) THIS appeal has been admitted on the following substantial questions of law:

(2.) THIS appeal relates to the asst. yr. 1992 -93. The undisputed facts of the case are that the assessee was carrying on the business of manufacture and sale of precision sheet metal components. In the assessment year under reference, the assessee decided to manufacture and market automatic coffee machine named Vendomate. The case of the assessee was that before manufacturing and marketing such a machine, the assessee had imported an automatic coffee machine from abroad at a cost of Rs. 3,62,014. It had also engaged the services of an engineer Shri H.O. Verma, for indigenizing and copying the machine in such a fashion so as to make it suitable for Indian conditions. A sum of Rs. 1,70,500 was paid to engineer H.O. Verma as retainership.

(3.) THE Revenue filed an appeal before the Tribunal which rejected the claim of the Revenue and dismissed the appeal. The Tribunal came to the conclusion that the definition of the phrase 'scientific research' under Section 43(4) has no connection with the deduction claimed under Section 35 and rejected the case of the Revenue. Hence the present appeal by the Revenue.