M/s Steel Strips Wheels Limited, Chandigarh V. Addl. CIT, Chandigarh

ITA 756/CHANDI/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51592 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 20-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Assessee Lawyers: PRADEEP SHARMA
• Keywords: Capital asset; Depreciation; Bonafide belief; Capital receipt; Revenue expenditure; Capital expenditure
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL:A BENCH: CHA NDIGARH BEFORE SHRI D K SRIVASTAVA, AM AND MS. SUSHMA CHOWL A, JM ITA NO. 756/CHD/2011 ASSESSMENT YEAR: 2008-09 M/S STEEL STRIPS WHEELS LTD., V ADDL.CIT, RANGE -V, SCO 49-50, SECTOR 26, CHANDIGARH. CHANDIGARH. PAN: AACCS-3003L & ITA NO. 828/CHD/2011 ASSESSMENT YEAR : 2008-09 ACIT, C-5(1), V M/S STEEL STRIPS WHEELS LTD., CHANDIGARH. SCO 49-50, SECTOR 26, CHANDIGARH. ASSESSEE BY: SHRI PRADEEP SHARMA RESPONDENT BY: SMT. JYOTI KUMARI DATE OF HEARING : 29.11.2011 DATE OF PRONOUNCEMENT : 30.11.2011 ORDER D K SRIVASTAVA: BOTH THE APPEALS, NAMELY THE ASSESSEE AND THE INCOME TAX DEPARTMENT ARE IN APPEAL AGAINST THE ORD ER PASSED BY THE CIT(A) ON 10.06.2011. THE APPEAL RELATES TO ASSESS MENT YEAR 2008-09. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUF ACTURING OF AUTOMOTIVE WHEEL RIMS. THE ASSESSEE HAS SET UP RES EARCH AND DEVELOPMENT CENTRE IN ITS PLANT AT MOHALI. THE SAI D R&D CENTRE HAS BEEN APPROVED U/S 35(2AB) OF THE INCOME-TAX ACT BY THE DEPARTMENT OF SCIENTIFIC & INDUSTRIAL RESEARCH VIDE THEIR ORDER D ATED 30.05.2008 FOR THE YEAR UNDER APPEAL FOR WEIGHTED DEDUCTION @ 150% ON EXPENDITURE INCURRED ON THE R&D CENTRE. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.09.2008 RETURNING TOTAL INCOME AT RS.4,56,47,133 /-. ASSESSMENT U/S 143(3) OF THE INCOME-TAX ACT WAS COMPLETED ON 30.12 .2010 ASSESSING THE TOTAL INCOME AT RS.17,06,38,560/-. 3. ON APPEAL LD. CIT(A) HAS DELETED SOME OF THE ADDITIONS/DISALLOWANCES AND ALSO CONFIRMED SOME OF THE ADDITIONS/DISALLOWANCES MADE BY THE AO. THAT IS HO W BOTH THE PARTIES ARE IN APPEAL BEFORE THIS TRIBUNAL. 4. IN ITA NO. 756/CHD/2011, THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.5,66,47,652/- BEING NATIONAL SAL ES TAX LIABILITY ON ACCOUNT OF SALES TAX EXEMPTION/SUBSIDY TREATING ITA 756 & 828/CHD/2011 STEEL STRIPS WHEELS LTD.,CHD 2 THE SAME AS REVENUE RECEIPT, WHEREAS, THE SAME IS A CAPITAL RECEIPT. THEREFORE, THE ADDITION OF RS.5,66,47,652/- MAY KINDLY BE DELETED. 2. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE CHARGING OF INTEREST U/S 234B, WHEREAS THE ASSESSEE IS NOT LIAB LE TO PAY ANY INTEREST U/S 234B OF THE INCOME-TAX ACT AS THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT THE SALES T AX SUBSIDY IS A CAPITAL RECEIPT NOT LIABLE FOR TAX. TH EREFORE INTEREST CHARGED U/S 234B MAY PLEASE BE DELETED. 5. IN ITA 828/CHD/2011, THE DEPARTMENT HAS TAKEN TH E FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE . 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN TREATING THE DIE TOOLING CH ARGES INCURRED AS RS.7,73,15,047/- AS REVENUE EXPENDITURE AS AGAINST CAPITAL EXPENDITURE ASSESSED BY THE AO. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) HAS ERRED IN TREATING TECHNICAL KNOW-HOW EXPENSES AMOUNTING TO RS.35,01,307/- AS REVENUE EXPENDITURE AS AGAINST CAPITAL EXPENDITURE ASSESSED BY THE AO. 6. AT THE TIME OF HEARING, BOTH THE PARTIES SUBMITT ED THAT THE ISSUES RAISED BY THE DEPARTMENT AS WELL AS THE ASSE SSEE IN THEIR GROUNDS OF APPEAL ARE FULLY COVERED BY THE ORDER PA SSED BY THIS TRIBUNAL ON 20.12.2007 IN DEPARTMENTS APPEAL IN TH E CASE OF THE ASSESSEE BEARING ITA NO.341/CHD/2007 FOR ASSESSMENT YEAR 2004-05. 7. IT WAS SUBMITTED THAT THE ISSUE RAISED BY THE AS SESSEE IN GROUND NO.1 IS IDENTICAL WITH ONE RAISED BY THE DEPARTMENT IN ITS APPEAL BEARING ITA NO. 341/CHD/2007 FOR ASSESSMENT YEAR 2004-05 WH ICH HAS BEEN CONSIDERED AND DECIDED BY THIS TRIBUNAL IN FAVOUR O F THE REVENUE. 8. WE HAVE PERUSED THE AFORESAID ORDER PASSED BY TH IS TRIBUNAL. THE OPERATIVE PORTION READS AS UNDER : 14. IT IS AGREED BY THE PARTIES THAT THE DECISION O F THE COMMISSIONER OF INCOME-TAX (A) IS CONTRARY TO THE D ECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS . M/S ABHISEK INDUSTRIES, 286 ITR 1. IN THIS CASE, THE HON'BLE H IGH COURT ITA 756 & 828/CHD/2011 STEEL STRIPS WHEELS LTD.,CHD 3 HELD THAT SALES-TAX SUBSIDY QUANTIFIED AT PERCENTAG E OF FIXED CAPITAL INVESTMENT IS A REVENUE RECEIPT. SINCE THE DECISION OF THE COMMISSIONER OF INCOME-TAX (A) IS CONTRARY TO T HE DECISION OF THE JURISDICTIONAL HIGH COURT REFERRED TO ABOVE, WE SET ASIDE HIS ORDER ON THIS ISSUE AND RESTORE THE ADDITION OF RS.1,28,81,928/-. 9. BOTH THE PARTIES AGREED THAT THE ISSUE RAISED IN GROUND NO.1 HAS BEEN ADJUDICATED BY THIS TRIBUNAL AGAINST THE ASSES SEE. 10. RESPECTFULLY FOLLOWING THE AFORESAID DECISION O F THIS TRIBUNAL, THE ISSUE RAISED IN GROUND NO.1 TAKEN BY THE ASSESSEE I S DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. GROUND NO.1 IS DISMISSED. 11. APROPOS GROUND NO.2 TAKEN BY THE ASSESSEE, LEVY OF INTEREST U/S 234B IS MANDATORY AND AUTOMATIC UPON COMPLETION OF ASSESSMENT. IN THIS VIEW OF THE MATTER, GROUND NO.2 TAKEN BY THE A SSESSEE IS DISMISSED. 12. AS REGARDS GROUND NO.2 TAKEN BY THE DEPARTMENT, BOTH THE PARTIES AGREE THAT THE ISSUE HAS ALREADY BEEN CONSIDERED AN D DECIDED BY THIS TRIBUNAL IN DEPARTMENTS APPEAL BEARING ITA NO. 341 /CHD/2007 (A.Y. 2004-05) AGAINST THE DEPARTMENT AND IN FAVOUR OF TH E ASSESSEE. THE ISSUE UNDER APPEAL HAS BEEN DISPOSED OF BY THIS TRI BUNAL IN THE SAID APPEAL WITH THE FOLLOWING OBSERVATIONS : 7. IT IS AGREED BY THE PARTIES THAT THE ISSUE IS C OVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBU NAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2001-02 (SU PRA). THE RELEVANT DISCUSSION AND FINDINGS ON THIS ISSUE CONT AINED IN PARA NOS.12 AND 13 OF THE ORDER WHICH ARE REPRODUCED HER EUNDER AND ADOPTED FOR THE DISPOSAL OF THE GROUND OF APPEAL RA ISED BY THE REVENUE :- 12. THE NEXT GROUND RAISED BY THE REVENUE IS THAT T HE LD CIT(A) ERRED IN TREATING THE DIE TOOLING CHARGES AS REVENUE EXPENDITURE AS ASSESSED AS CAPITAL EXPENDI TURE BEING OF ENDURING NATURE. THE LD DR SUPPORTED THE ASSESSMENT ORDER AND PLACED RELIANCE UPON THE DECIS ION IN CIT VS SARASWATI INDUSTRIAL SYNDICATE LTD (166 I TR 366) AND 78 ITD 327. ON THE OTHER HAND THE CONTENTI ON OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT FOR EA RLIER ASSESSMENT YEARS, ON IDENTICAL FACT, IT WAS ALLOWED AS REVENUE EXPENDITURE. RELIANCE WAS ALSO PLACED UPON THE DECISION IN THE CASE OF CIT VS MADRAS SPINNERS LTD (177 ITR 495) AND 275 ITR 403. ITA 756 & 828/CHD/2011 STEEL STRIPS WHEELS LTD.,CHD 4 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON THE FILE. THE CLAIM OF THE ASSESSEE BEFORE THE LD ASSESSING OFFICER WAS AS UNDER:- THE COMPANY HAS CLAIMED DIE TOOLING CHARGES OF RS.5579108/- AS REVENUE EXPENDITURE WHEREAS THE SAME HAS BEEN CAPITALIZED IN THE BOOKS OF ACCOUNT B UT THE COMPANY HAS NOT CLAIMED ANY DEPRECIATION ON THE SAME IN THE INCOME TAX RETURN. THE COMPANY HAS INCURRED THE ABOVE SAID EXPENDITURE FOR DEVELOPMENT OF DIE TOOLINGS TO MANUFACTURE THE AUTOMOTIVE WHEEL RIMS WITH AN OBJECT OF ACHIEVING THE MAXIMUM OUTPUT . THE EXPENDITURE HAS BEEN INCURRED WITH AN OBJECT OF IMPROVING THE EXISTING PRODUCTS ALREADY MANUFACTURE D BY THE COMPANY AND DOES NOT RELATE TO SETTING UP TO ALTOGETHER NEW PRODUCT OR FOR SETTING UP OF A NEW U NIT. THE COMPANY BY INCURRING SUCH EXPENDITURE HAS ONLY EFFECTED ECONOMY AND EFFICIENCY IN MANUFACTURING OF THE EXISTING PRODUCTS AND OBTAINED ONLY BUSINESS ADVANTAGE. AS THE EXPENDITURE INCURRED IS NOT OF ENDURING NATURE TO PUT IT IN THE CATEGORY OF CAPITA L EXPENDITURE AND HENCE, THE SAME MAY PLEASE BE ALLOWED AS REVENUE EXPENDITURE. HOWEVER, THE LD ASSESSING OFFICER TREATED THE IMPUG NED AMOUNT AS CAPITAL EXPENDITURE WHICH WAS DELETED BY THE LD CIT(A) AGAINST WHICH THE REVENUE IS IN APPEAL BEFOR E THE TRIBUNAL. WE HAVE FOUND THAT THE TRIBUNAL IN THE C ASE OF DCIT VS METALMAN AUTO PRIVATE LTD (78 ITD 327) CHANDIGARH, ON IDENTICAL FACT, DECIDED IN FAVOUR OF THE ASSESSEE. IT WAS HELD TO BE REVENUE IN NATURE SINC E THE EXPENDITURE WERE INCURRED FOR MODERNIZATION OF EXIS TING PROJECTS, WHICH WAS ALREADY MANUFACTURING THE SAME PRODUCTS, AND SIMPLY TO INCREASE THE BUSINESS MORE EFFICIENTLY AND MORE PROFITABILITY, ESPECIALLY WHEN THE EXPENSES WERE INCURRED FOR MAKING TECHNOLOGICAL CHA NGES. IT IS NOT THE CASE OF THE REVENUE THAT NEW MACHINERY W AS INSTALLED RATHER THE ASSESSEE INCURRED EXPENSES FOR THE IMPROVEMENT OF PRODUCT AND QUALITY WITH AN OBJECT O F ACHIEVING MAXIMUM OUTPUT BY IMPROVING THE ALREADY E XISTING MACHINERY, THEREFORE, IT CANNOT BE SAID THAT IT IS SETTING UP ITA 756 & 828/CHD/2011 STEEL STRIPS WHEELS LTD.,CHD 5 OF ALTOGETHER NEW BUSINESS. THE ASSESSEE COMPANY BY INCURRING SUCH EXPENDITURE HAS ONLY IMPROVED THE EF FICIENCY IN MANUFACTURING OF EXISTING PRODUCTS MORE ECONOMIC ALLY FOR THE PURPOSES OF GETTING MAXIMUM BUSINESS ADVANTAGE. IN VIEW OF THESE FACTS, WE HAVE NOT FOUND ANY DEFECT I N THE CONCLUSION OF THE LD CIT(A), CONSEQUENTLY, THIS GRO UND OF THE REVENUE IS ALSO DISMISSED. 8. SINCE THE DECISION OF THE COMMISSIONER OF INCOME -TAX (A) IS IN ACCORD WITH THE DECISION OF THE TRIBUNAL IN A SSESSEES CASE REFERRED TO ABOVE, WE FIND NO JUSTIFICATION TO INTE RFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME-TAX (A). THE G ROUND OF APPEAL RAISED BY THE REVENUE IS THUS DISMISSED. 13. RESPECTFULLY FOLLOWING THE AFORESAID DECISION, GROUND NO.2 TAKEN BY THE DEPARTMENT IS DISMISSED. 14. APROPOS GROUND NO.3 TAKEN BY THE DEPARTMENT, BO TH THE PARTIES SUBMITTED THAT THE ISSUE WAS COVERED BY THE ORDER O F THIS TRIBUNAL IN DEPARTMENTS APPEAL BEARING ITA NO. 341/CHD/2007 (A .Y. 2004-05) IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITH TH E FOLLOWING OBSERVATIONS : 4. THE PARTIES AGREED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL FOR ASSESSMENT YEAR 2001-02 IN I.T.A.NO. 750/CHANDI/200 5, ORDER DATED 30.7.2007. THE SAID ORDER HAS FURTHER BEEN FOLLOWED IN ASSESSMENT YEAR 2003-04 IN I.T.A.NO. 897/CHANDI/2006, ORDER DATED 30.7.2007. FOR THE SA KE OF READY REFERENCE AND ADOPTING THE REASONING WE REPRO DUCE PARA NOS.9 TO 11 OF THE ORDER OF THE TRIBUNAL IN I. T.A.NO. 750/CHANDI/2005 (SUPRA) AS UNDER :- 9. NEXT GROUND RAISED BY THE REVENUE IS THAT THE L D CIT(A) ERRED IN ALLOWING RELIEF TO THE ASSESSEE ON ACCOUNT OF DI SALLOWANCE OF EXPENSES ON TECHNICAL KNOW-HOW AT RS.58,44,711/- TR EATING THEM AS REVENUE AS AGAINST CAPITAL EXPENDITURE AS ASSESSED BY LD ASSESSING OFFICER. IN NUTSHELL, THE LD SR DR SUPPORTED THE A SSESSMENT ORDER. RELIANCE WAS PLACED UPON THE DECISION IN 224 ITR 34 2 AND 251 ITR 155. ON THE OTHER HAND, THE LD COUNSEL FOR THE ASSE SSEE FILED THE COPY OF AGREEMENT BY CONTENDING THAT IT WAS EXPANSION OF THE BUSINESS. RELIANCE WAS PLACED UPON 236 ITR 471, 269 ITR 369, ITA NO.1469/CHD/95 AND 236 ITR 314(SC). ITA 756 & 828/CHD/2011 STEEL STRIPS WHEELS LTD.,CHD 6 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON THE FILE. THE ASSESSEE PAI D A SUM OF RS. 58,44,711/-, UNDER TECHNICAL COLLABORATION AGREEMEN T, TO M/S RING TECH COMPANY. JAPAN. A SUM OF RS. 25,53,906/- WAS P AID UNDER THE ORIGINAL AGREEMENT FOR THE PERIOD OF 3 YEARS FROM 2 3.6.97 TO 22.6.2000 AND RS. 32,90,805/- WAS PAID UNDER THE NE W AGREEMENT WHICH IS EXTENSION OF ORIGINAL AGREEMENT FROM 23.6. 2000 TO 22.6.2002, FOR A PERIOD OF 2 YEARS. AS PER THE ASSE SSEE THE MAIN PURPOSE OF THESE AGREEMENTS WAS TO INCREASE THE PRO DUCTIVITY FROM PRESENT AVERAGE LEVEL OF 210 WHEELS PEAR HOURS TO 3 40 WHEELS PER HOURS AND FURTHER FOR REDUCTION OF REJECTIONS SUBST ANTIALLY. SIMILARLY, THE MAIN OBJECT OF THE SECOND AGREEMENT WAS TO IMPROVE PRODUCTIVITY, RESOLUTION OF LICENSES, CHRONIC QUALI TY PROBLEMS, REDUCING PROCESS REJECTION/REWORK AND TECHNICAL UP- GRADATION IN THE EXISTING CAR LINE AND INTRODUCING OF THE MANUFACTUR ING FACILITY OF TRACTOR WHEELS. THE CONTENTION OF THE REVENUE IS T HAT IT SHOULD BE ASSESSED AS CAPITAL EXPENDITURE. THE OBSERVATION OF THE LD ASSESSING OFFICER IS REPRODUCED HEREWITH: ATTENTION IS INVITED TO SECTION 32(1)(II) WHEREIN KNOW HOW IS CONSIDERED TO BE AN INTANGIBLE ASSET W.E.F. 1.4.99. IT MAY BE POINTED OUT THAT THE TECHNICAL COLLABORATION AGREEM ENT SIGNED ORIGINALLY ON 23.6.1997 BY THE ASSESSEES OWN ADMIS SION HAS BEEN RENEWED FROM 23.6.2000 AND, IS THEREFORE, SQUA RELY COVERED UNDER THE SAID PROVISION OF THE STATUTE. THE CASE LAW CITED AS DCIT V METALMAN AUTO (P) LTD (78 ITR 327) IS NOT APPLICABLE TO THE INSTANT CASE SINCE TH E SAME PERTAINS TO ASSESSMENT YEAR 1991-92 WHEN THE INCOME TAX ACT DID NOT RECOGNIZE TECHNICAL KNOW HOW AS AN INTANGIB LE ASSET ON WHICH DEPRECIATION IS ALLOWABLE. FURTHER, IT IS SEEN THAT THE TECHNICAL COLLABORATIO N AGREEMENT HAS SPECIFIC CLAUSES REGARDING THE TRAINING OF ENGI NEERS W.R.T SPECIFIC ITEMS VIZ TRAINING IN RIMS, TRAINING IN DI SCS AND TRAINING IN DESIGN ETC. THE VENUES FRO TRAINING VARY WITH T HE SPECIFIC ITEMS AS ALSO TRAINING SCHEDULES. IT HAS ALSO BEEN CATEGORICALLY SPECIFIED IN THE TECHNICAL COLLABORATION AGREEMENT THAT THE EXPENSES TOWARDS THE FOREIGN AND DOMESTIC TRAVEL OF THE TECHNICIANS WOULD HAVE TO BE BORNE BY THE ASSESSEE. FROM THE DETAILS OF THE FOREIGN TRAVELING EXPENSES, IT IS NO TICED THAT THE ENTIRE EXPENDITURE HAS BEEN INCURRED TOWARDS TO & F RO TRAVEL BETWEEN JAPAN AND INDIA FOR THE PURPOSES OF TRAININ G AS PER THE TECHNICAL COLLABORATION AGREEMENT IF THE AFORESAID CONCLUSION OF THE LD ASSESSING OFF ICER IS ANALYSED. IT SAYS THAT THESE EXPENSES ARE LINKED TO THE EXPAN SION OF THE PRESENT UNIT AND VIRTUALLY IT IS A NEW UNIT, THEREF ORE, THE EXPENSES ARE OF CAPITAL NATURE WHEREAS THE CONCLUSION OF THE LD CIT(A) IS AS UNDER:- THE ASSESSEE WAS PAYING TECHNICAL KNOW HOW FEES TO M/S RING TECH CO., JAPAN TO INCREASE THE PRODUCTION AND TO R EDUCE THE ITA 756 & 828/CHD/2011 STEEL STRIPS WHEELS LTD.,CHD 7 REJECTIONS SO AS TO IMPROVED THE PRODUCTION QUALITY AND MAKE THE OPERATION PROFITABLE. NO CAPITAL ASSET AS SUCH HAS BEEN ACQUIRED BY THE COMPANY, WHICH COULD BE CONSIDERED TO BE OF ENDURING NATURE. THE OBJECT WAS TO EFFECT ECONOMY AND EFFICI ENCY IN THE MANUFACTURING PROCESS. THE ACQUISITION OF THE KNOWL EDGE HAS HELPED IN SUBSTANTIAL INCREASE IN PRODUCTION BUT IN FACE OF SWIFT CHANGES OCCURRING IN THE TECHNOLOGICAL WORLD, IT CA NNOT BE SAID THAT THE CHANGED METHOD OF THE TECHNOLOGY ACQUIRED BY THE APPELLANT WOULD BE OF PERMANENT NATURE. THE HON'BLE SUPREME COURT DECISION IN THE CASE OF ALEMBIC CHEMICAL WORK S CO LTD V CIT REPORTED IN 177 ITR 377 IS APPLICABLE TO THE FA CTS OF THE CASE. SO ALSO THE DECISION OF THE HON'BLE ITAT, CHANDIGAR H BENCH IN THE CASE OF DCIT V METALMAN AUTO P. LTD 78 ITD 327. TAKING INTO ACCOUNT ALL THE ABOVE FACTS AND FOLLOWING THE ABOVE JUDGMENT, THE DISALLOWANCE MADE ON THIS ACCOUNT IS HELD TO BE UN JUSTIFIED AND THE SAME IS DELETED. 11. IF THE FACTS OF THE CASE AND THE CONCLUSION DRA WN BY LD ASSESSING OFFICER/CIT(A) ARE ANALYSED, THE DECISION OF THE LD FIRST APPELLATE AUTHORITY SEEMS TO BE MORE REASONED ONE W HICH IS BASED ON VARIOUS JUDICIAL PRONOUNCEMENTS IDENTICAL TO THE FACTS OF THE PRESENT APPEAL . THE ASSESSEE IS FURTHER FORTIFIED BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT VS SWARAJ ENGINES LTD (2006) 203 CTR 310(P&H). WHEREIN THE AS SESSEE CLAIMED DEDUCTION FOR AN AMOUNT OF RS. 26,65,340/- PAID TO M/S KIRLOSKAR OIL ENGINES LTD AS ROYALTY ON THE BASIS O F AGREEMENT FOR THE PURPOSES OF ACQUIRING TECHNICAL KNOW HOW. IT WA S DECIDED IN FAVOUR OF THE ASSESSEE BY UPHOLDING THE DECISION OF THE TRIBUNAL. THE HON'BLE COURT HAS ALREADY CONSIDERED THE DECISI ON OF THE HON'BLE APEX COURT PRONOUNCED IN THE CASE OF RADHA SWAMI VS CIT (193 ITR 321), CIT VS WAVIN (INDIA) LTD (236 ITR 3 14) AND VARIOUS OTHER DECISIONS . THE HON'BLE GUJRAT HIGH COURT IN THE CASE OF CIT VS MIHIR TEXTILES LTD (2006) 287 ITR 232, ON IDENTICAL FACT, DECIDED IN FAVOUR OF THE ASSESSEE BY HOLDING THAT TECHNICAL SERVICE FEE IS D EDUCTIBLE. WHILE COMING TO THIS CONCLUSION THE HON'BLE COURT FOLLOWE D THE DECISION IN CIT VS ASHOKA MILLS LTD.(218 ITR 526)(GUJ). THE HON'BLE APEX COURT IN THE CASE OF ALEMBIC CHEMICAL WORKS CO LTD V CIT (177 ITR 377) (SC), THE HON'BLE KERALA HIGH COURT IN THE CASE OF CIT V MADRAS SPINNERS LTD (177 ITR 495) AND THE HON'BLE A NDHRA PRADESH HIGH COURT IN THE CASE OF VEJAN HYDRAIR (P) LTD V CIT (177 ITR 552), ON IDENTICAL FACT, HELD THAT THE AMO UNT SO PAID UNDER THE AGREEMENT IS REVENUE EXPENDITURE. HOWEV ER, THE HON'BLE APEX COURT IN THE CASE OF JONAS WOODHEAD & SONS (INDIA) LTD VS CIT (224 ITR 342) WHEREIN COMPOSITE PAYMENT FOR SUPPLY OF TECHNICAL KNOW HOW AND SERVICES FOR SETTING UP PLAN T AND MANUFACTURE OF PRODUCT, IT WAS HELD THAT THE EXPEND ITURE IS OF ENDURING BENEFIT TO THE ASSESSEE, THEREFORE, IS OF CAPITAL NATURE. ITA 756 & 828/CHD/2011 STEEL STRIPS WHEELS LTD.,CHD 8 THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF SHRI RAM BEARINGS LTD (251 ITR 155) WHEREIN THE ASSESSEE WAS ALLOWED TO USE TECHNICAL KNOW HOW EVEN AFTER PERIOD OF AGREEMENT, IT WAS HELD THAT THE BENEFIT IS OF ENDURING NATURE, THEREFORE, IS OF CAPITAL IN NATURE. HOWEVER, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCE S AND THE LATEST DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SWARAJ ENGINES LTD DATED 18 TH MAY 2006 WHEREIN THE HON'BLE COURT HAS ALREADY FOLLOWED THE DECISIONS FROM THE H ONBLE APEX COURT IN THE CASE OF RADHA SWAMI SATSANG VS CIT (SU PRA) AND WAVIN INDIA LTD (SUPRA), WE UPHOLD THE STAND OF THE LD CIT(A). CONSEQUENTLY, THIS GROUND OF THE REVENUE IS ALSO HA VING NO MERIT. 5. RESPECTFULLY FOLLOWING THE ABOVE ORODER OF THE T RIBUNAL WE UPHOLD THE VIEW OF THE COMMISSIONER OF INCOME-TAX ( A) AND DISMISS THE GROUND OF APPEAL RAISED BY THE REVENUE IN THIS REGARD. 15. RESPECTFULLY FOLLOWING THE AFORESAID ORDER, GRO UND NO.3 TAKEN BY THE DEPARTMENT IS DISMISSED. 16. OTHER GROUNDS OF APPEAL TAKEN BY THE DEPARTMENT DO NOT REQUIRE SPECIFIC ADJUDICATION. 17. IN VIEW OF THE FOREGOINGS, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED ON 30 TH NOV.,2011. SD/- SD/- (SUSHMA CHOWLA) (D K SRI VASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH NOV.,2011 POONAM COPY TO: 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE CIT(A), 4. THE CIT 5. THE D.R, INCOME-TAX DEPARTMENT, CHANDIGARH ASSISTANT REGISTRAR, ITAT, CHANDIGARH