Income Tax, (1989) 111 ITR 377 (SC) and Jonas Woodhead and Sons (India) Limited v. CIT

224 ITR 342Supreme Court of India1997#1895 most cited

What is Income Tax, (1989) 111 ITR 377 (SC) and Jonas Woodhead and Sons (India) Limited v. CIT authority for?

Expenditure incurred for the expansion, extension, or betterment of an existing business, or for improvisation that is part of the existing business, is allowable as revenue expenditure. Payments made for acquiring technical know-how and exclusive rights for setting up a new business can be capital expenditure.

60

judgments rely on this decision, according to BharatTax’s citation analysis of 366,339 Indian tax judgments — from 2007 to 2025.

Also referred to as

Jonas Woodhead and Sons (India) Limited v. CIT · 224 ITR 342 · revenue expenditure · capital expenditure · technical know-how · new business · existing business · accretion to capital asset · section 37(1)

Sections most often in play

Section 143(3)Section 37(1)Section 194HSection 35ABBSection 40(a)(ia)Section 144BSection 260A

Issues it is cited on

section 35abbsection 35abtest of enduring benefitsection 35aenduring benefitresulting companydisallowance under section 40(a)(ia)prohibited by lawsection 194hpptsection 35demerger

Judgments citing Income Tax, (1989) 111 ITR 377 (SC) and Jonas Woodhead and Sons (India) Limited v. CIT

Knight Riders Sorts P. Ltd, Mumbai vs. DCIT Cen Cir 4(2), Mumbai

In the result, grounds Nos

ITA 6675/MUM/2016[2012-13]Status: DisposedITAT Mumbai10 Nov 2020AY 2012-13

Bench: Shri S. Rifaur Rahman & Shri Pavan Kumar Gadaleknight Riders Sports Pvt. Dcit, Cc – 4(2) Ltd., Backstage, Plot Room No. 411, Aayakar बनाम/ No.612, 15Th Road, Bhavan, M.K. Road, Junction Of Ramkrishna Vs. Mumbai-400020. Mission Road, Santacruz (W), Mumbai – 400054. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aadck3118M .. (""यथ" / Respondent) (अपीलाथ" /Appellant)

For Appellant: Shri Jehangir Mistri with Shri Hiten Chande, ARFor Respondent: Shri A. Mohan, CIT-DR
Section 143(1)Section 143(2)Section 143(3)Section 234BSection 271(1)(c)Section 32(1)(ii)Section 37(1)

…evenue expenditure. We find that the judgments of the Hon'ble Supreme Court in the case of Techno Shares & Stocks Ltd. & Ors. vs. Commissioner Of Income Tax (2010) 327 ITR 323( SC) and Jonas Woodhead And Sons (India) Ltd. Vs. Commissioner of Income-Tax (1997) 224 ITR 342 (SC) relied upon by the A.O are distinguishable on facts. We find that in the case of Techno Shares & Stocks Ltd. & Ors (supra) the issue before the Hon‟ble Apex Court was as to whether the right of membership conferred upon the members under the BSE membership card is a "business or commercial right" which gives a non-defaulting continuing membe…

Deputy Commissioner of Income Tax Circle-4(1)(1), Bangalore vs. M/S Lmg Brands India Pvt Ltd, Bangalore

In the result, both the revenue’s appeal and assessee's C

ITA 3291/BANG/2018[2008-09]Status: DisposedITAT Bangalore28 Sept 2020AY 2008-09

Bench: Shri N.V. Vasudevan & Shri Chandra Poojaridy. Commissioner Of Income Tax, Circle 4(1)(1), Bangalore. ….Appellant Vs. M/S. Lmg Brands India Pvt. Ltd., 5Th Floor, 77 Town Centre Building, No.3, West Wing, Off Hal Airport Road, Yemlur, Bangalore-560 037 Pan Aaecm 2693J ……Respondent. C.O. No.08/Bang/2019 (In Ita No.3291/Bang/2018) (Assessment Year: 2008-09) (By Assessee) Assessee By: Shri Sharath Rao, C.A. Revenue By: Smt. R. Premi, Jcit (D.R)

For Appellant: Shri Sharath Rao, C.AFor Respondent: Smt. R. Premi, JCIT (D.R)
Section 37

…These are in the nature of day to day operations of the assessee's business. Being so, the CIT(Appeals) justified in allowing the expenditure as revenue expenditure. This position is fortified with the decision in the case of Jonas Woodhead & Sons Ltd. Vs.CIT 224 ITR 342 wherein it has been held that - “ The Courts have applied different tests like starting of a new business on the basis of technical know-how received from the foreign firm, exclusive right of the company to use the patent or trademark which it receives from the foreign firm, the payments made by the company to the foreign firm whether a definite…

Knight Riders Sports P.Ltd, Mumbai vs. DCIT Cen Cir 29, Mumbai

The appeal of the assessee is partly allowed

ITA 4389/MUM/2015[2011-12]Status: DisposedITAT Mumbai30 Jun 2020AY 2011-12

Bench: Shri Vikas Awasthy & Shri S.Rifaur Rahmanआअसं. 4389/मुं/2015 ("न.व. 2011-12) M/S. Knight Riders Sports Private Limited, Backstage, Plot No.612, 15Th Road, Junction Of Ramakrishna Mission Road, Santacruz (W), Mumbai 400 054. Pan: Aadck3118M ...... अपीलाथ" /Appellant

For Appellant: Shri J.D. Mistry, Sr. Advocate with Shri Hitendra Chanda &For Respondent: S/Shri Narendra Singh & Jangapanji
Section 143(3)Section 32(1)(ii)

…आयकर अपील"य अ"धकरण मुंबई पीठ “ एच ”, मुंबई IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H”, MUMBAI "ी "वकास अव"थी, "या"यक सद"य एवं "ी एस. "रफौर रहमान, लेखा सद"य के सम" BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER आअसं. 4389/मुं/2015 ("न.व. 2011-12) M/s. Knight Riders Sports Private Limited, Backstage, Plot No.612, 15th Road, Junction of Ramakrishna Mission Road, Santacruz (W), Mumbai 400 054. PAN: AADCK3118M ...... अपीलाथ" /Appellant बनाम Vs. Dy. Commissioner of Income Tax, Central Circle – 29, Aaykar Bhavan, M.K.Road, Mumbai 400 020 ..... ""तवाद"/Respondent अपी…

DCIT(Ltu), New Delhi vs. M/S. Honda Cars India Ltd., Greater Noida

In the result, appeal filed by Revenue is dismissed, as far as Ground No

ITA 3229/DEL/2014[2009-10]Status: DisposedITAT Delhi05 Nov 2019AY 2009-10

Bench: Shri H.S. Sidhu & Shri Anadee Nath Misshra

For Appellant: Shri Deepak Chopra and Shri Amit Srivastava, AdvFor Respondent: Shri Sanjay Goyal, CIT(DR)
Section 143(3)

…ure in the case of Ram Kumar Pharmaceutical Works Vs. CIT (1979) 119HR 33 (Allahabad) and CIT Vs. Warner Hindustan Limited (1998) 9 sec 533, 534. The Hon'ble Supreme Court in the case of Jonas Woodhead and Sons (India) Limited. Vs. Commissioner of Income- Tax 224 ITR 342 {Supreme Court} also held that the Royalty payment, which was in terms of the collaboration agreement between the assessee & foreign company, was a composite payment for supply of technical know-how and services for setting up plant and manufacture of products as it was the composite agreement. Further held that the sum disallowed and treated as…

Tata Moters Limited (Formerly Known As Tata Engineering & Locomotive Company Ltd.), Mumbai vs. Dy. CIT, Cir..-2(1), Mumbai

In the result, appeal of the assessee is partly allowed and appeal of the revenue is dismissed

ITA 3333/MUM/2011[2003-04]Status: DisposedITAT Mumbai17 Jul 2019AY 2003-04

Bench: Shri M.Balaganesh, Am & Shri Amarjit Singh, Jm M/S. Tata Motors Limited Vs. Dy. Commissioner Of (Formerly Known As Tata Income Tax-2(1), Engineering & Locomotive Aayakar Bhavan Company Limited M.K. Marg, Mumbai – 400 Bombay House, 24 020 Homi Mody Street Hutatma Chowk Mumbai – 400 001 Pan/Gir No.Aaact2727Q (Appellant) .. (Respondent) Dy. Commissioner Of Vs. M/S. Tata Motors Limited Income Tax-2(1), (Formerly Known As Tata Aayakar Bhavan Engineering & Locomotive M.K. Marg, Mumbai – Company Limited 400 020 Bombay House, 24 Homi Mody Street Hutatma Chowk Mumbai – 400 001 Pan/Gir No.Aaact2727Q (Appellant) .. (Respondent)

Section 143(3)Section 43B

…has relied upon the judgement of the Calcutta High Court delivered in the case of CIT v . Graphite India Ltd. [1996] 221 M/s. Tata Motors Limited ITR 420 and decision of the Hon'ble Supreme Court in the case of Jonas Woodhead & Sons (India) Ltd. v. CIT [1997] 224 ITR 342/ 91 Taxman 1 and Allembic Chemical Works Co. Ltd. v. CIT [1989] 177 ITR 377/ 43 Taxman 312 (SC) and held that in view of the ratio of above judgements, if the expenditure is incurred for acquisition of an asset which gives or renders enduring benefit to the assessee, naturally it is to be considered as capital expenditure otherwise revenue expend…

Lg Electronics India (P) Ltd., New Delhi vs. ACIT, Noida

In the result, both the appeals filed by the assessee are partly allowed for

ITA 3613/DEL/2017[2006-07]Status: DisposedITAT Delhi18 Jul 2018AY 2006-07

Bench: Shri R. K. Panda & Shri Kuldip Singh

For Respondent: Shri H. K. Choudhary, CIT-DR
Section 143(3)Section 201(1)Section 251(1)(a)Section 40Section 80JSection 92C

…Supreme Court as a revenue expenditure. 16.3. In contrast to above decisions holding payment of royalty as a revenue expenditure, there is a line of judgments holding the payment of royalty as a capital expenditure. In Jonas Woodhead & Sons Ltd. Vs CIT (1997) 224 ITR 342 (SC), the assessee set up a new business and the foreign firm, in addition to supplying technical knowhow, also rendered valuable services in setting up the factory itself and the agreement. The Hon’ble Supreme Court held that 25% of the royalty was a capital expenditure. In Southern Switchgear Ltd. VS. CIT and Anr. (1998) 232 ITR 359 (SC), the f…

Lg Electronics India (P) Ltd., New Delhi vs. ACIT, Noida

In the result, both the appeals filed by the assessee are partly allowed for

ITA 3612/DEL/2017[2005-06]Status: DisposedITAT Delhi18 Jul 2018AY 2005-06

Bench: Shri R. K. Panda & Shri Kuldip Singh

For Respondent: Shri H. K. Choudhary, CIT-DR
Section 143(3)Section 201(1)Section 251(1)(a)Section 40Section 80JSection 92C

…Supreme Court as a revenue expenditure. 16.3. In contrast to above decisions holding payment of royalty as a revenue expenditure, there is a line of judgments holding the payment of royalty as a capital expenditure. In Jonas Woodhead & Sons Ltd. Vs CIT (1997) 224 ITR 342 (SC), the assessee set up a new business and the foreign firm, in addition to supplying technical knowhow, also rendered valuable services in setting up the factory itself and the agreement. The Hon’ble Supreme Court held that 25% of the royalty was a capital expenditure. In Southern Switchgear Ltd. VS. CIT and Anr. (1998) 232 ITR 359 (SC), the f…

DCIT, Chennai vs. Shriram Properties Private Ltd., Chennai

In the result, the appeal filed by the Revenue is dismissed

ITA 854/CHNY/2017[2013-14]Status: DisposedITAT Chennai29 May 2018AY 2013-14

Bench: Shri George Mathan & Shri S. Jayaraman

For Appellant: Mr.Mudit Bohara.A., AdvFor Respondent: Mr.Srinivasa Rao, CIT
Section 115JSection 14A

…has accepted this finding of the ld. CIT(A) and has not filed further appeal before the ITAT for assessment years 2004-05 and 2005-06. 18. The ld.DR has relied on the decision of Hon'ble Supreme Court in the case of Jonas Woodhead and Sons (India) Ltd vs CIT, 224 ITR 342, in support of his ground. The ld.AR has supported the order of the ld. CIT(A). 19. We have gone through the decision relied upon by the ld.DR and have found that their Lordships of Supreme Court were actually considering a case of Composite Agreement which involved an agreement to implement a turnkey project right from providing design, etc. in…

DCIT, Chennai vs. Shriram Housing Finance Ltd., Chennai

In the result, the appeal filed by the Revenue is dismissed

ITA 853/CHNY/2017[2013-14]Status: DisposedITAT Chennai29 May 2018AY 2013-14

Bench: Shri George Mathan & Shri S. Jayaramanआयकर अपील सं./Ita No.853/Chny/2017 "नधा"रण वष" /Assessment Year: 2013-14

For Appellant: Mr.Mudit Bohara.A, AdvFor Respondent: Mr.Awijit Rakshit, Sr.AR
Section 115JSection 14A

…has accepted this finding of the ld. CIT(A) and has not filed further appeal before the ITAT for assessment years 2004-05 and 2005-06. 18. The ld.DR has relied on the decision of Hon'ble Supreme Court in the case of Jonas Woodhead and Sons (India) Ltd vs CIT, 224 ITR 342, in support of his ground. The ld.AR has supported the order of the ld. CIT(A). 19. We have gone through the decision relied upon by the ld.DR and have found that their Lordships of Supreme Court were actually considering a case of :- 4 -: Composite Agreement which involved an agreement to implement a turnkey project right from providing design,…

Knight Riders Sports P. Ltd, Mumbai vs. Asst CIT Cen Cir 29, Mumbai

The appeal of the assessee is partly allowed in terms of our aforesaid observations

ITA 1307/MUM/2013[2009-10]Status: DisposedITAT Mumbai29 Dec 2017AY 2009-10

Bench: Shri G.S.Pannu, Am & Shri Ravish Sood, Jm M/S Knight Riders Sports Acit, Central Circle-29, Private Limited, Deepvan बिधम/ Mumbai. Anand Vihar Society, 20Th Vs. Road, Khar (W), Mumbai-400 052 स्थामी रेखा सं./ जीआइआय सं./ Pan No. Aadck3118M (अऩीराथी /Appellant) (प्रत्मथी / Respondent) :

For Appellant: Mr. J.D. Mistry, A.RFor Respondent: Mr. Rajesh Yadav, D.R
Section 143(3)Section 250Section 32(1)(ii)Section 37(1)

…e Act. The A.O further in order to fortify his aforesaid conviction that the Franchise fee paid by the assessee was not a revenue expenditure, relied on the judgment of the Hon’ble Supreme Court in the case of Jonas Woodhead & Sons (India) Ltd. Vs. CIT (1997) 224 ITR 342 (SC). The A.O observed that in the case before the Hon‟ble Supreme Court, the assessee had started a new business by availing the technical know-how and an exclusive right to use the patent or trademark of a foreign company. The Hon‟ble Apex Court observed that as per the agreement with the foreign company what was set up by the assessee was a ne…

Dci India Ltd., Kolkata vs. DCIT, Cir-10(1) Kolkata, Kolkata

In the result, the appeal of the assessee is allowed

ITA 126/KOL/2017[2010-2011]Status: DisposedITAT Kolkata05 Apr 2017AY 2010-2011

Bench: Shri N. V. Vasudevan & Shri M. Balaganesh, I.T. A.No. 126 /Kol/2017 Assessment Years: 2010-11 Dic India Ltd. Dcit, Cir-10(1), Kolkata -Vs- [Pan :Aabbcc0703C] (Appellant) (Respondent) For The Appellant Sri D. S. Damle, Fca Sri G. Mallikarjuna, Cit, Dr. For The Respondent Date Of Hearing 22.03.2017 Date Of Pronouncement 05.04.2017

Section 143(3)Section 144CSection 263Section 92E

….C. (Pumps) Ltd. (supra) the question should. be answered in favour of the assessee. 8. Ms. Gutgutia, learned advocate appearing for the revenue, drew our attention to a judgment of the apex Court in the case of Jonas Woodhead & Sons (India) Ltd. v. CIT[1997] 224 ITR 342/91 Taxman 1 (SC). She submitted that the moot question for consideration has been indicated in the aforesaid judgment as follows: "Whether the expenditure or payment thus made makes an accretion to the capital asset and after the court comes to the conclusion that it does so, then it has to be held. to be a capital expenditure." 9. She contended…

ACIT 14(2)(1), Mumbai vs. Idea Cellular Ltd, Mumbai

In the result the appeal of the Department is dismissed

ITA 3372/MUM/2015[2007-08]Status: DisposedITAT Mumbai06 Feb 2017AY 2007-08

Bench: Shri Dt Garasia, Jm & Shri Ashwani Taneja, Am

For Appellant: Shri M.C. Omi Ningshen, DRFor Respondent: Ms. ManshiPadhiar, AR
Section 1Section 271Section 271(1)(c)Section 32

…d net addition was made. The assessee went in appeal and CIT (A) has confirmed 25% of Rs.3,26,25,000/-treating it as a capital expenditure as per the ratio laid down by the Hon'ble Supreme Court in the case of Jonus Woodhead and Sons (India) Pvt. Ltd. vs CIT, 224 ITR 342. The Assessing Officer was of the view that benefit of know-how which includes only skill, expertise and experience of Modicorp Group is a benefit of enduring nature with would be used by the assessee company over a number of years in its business. Therefore, Assessing Officer was of the view that assessee has made a claim for deduction and it ha…

M/S Hero Honda Motors Ltd, New Delhi vs. DCIT, New Delhi

In the result, appeal filed by the assessee is allowed

ITA 2148/DEL/2009[2004-05]Status: DisposedITAT Delhi02 Feb 2017AY 2004-05

Bench: Sh C.M.Garg & Shri Prashant Maharishihero Honda Motors Ltd, Dcit, 34, Basant Lok, Vasant Vihar, Circle-12(1), Vs. New Delhi New Delhi Pan:Aaacg0812J (Appellant) (Respondent)

For Appellant: Sh. Ajay Vohra, Sr. AdvFor Respondent: Sh. AK Saroha, CIT DR
Section 143(3)Section 195Section 263Section 32Section 37(1)Section 40Section 9

…cquired for use of technical know-how for a limited period, the payment would not bring into existence an asset of enduring nature. In this decision, reference was made to the decision of the Supreme Court in Jonas Woodhead and Sons (India) Ltd. v. CIT [1997] 224 ITR 342 (SC), wherein it has been held that the answer to the question whether a particular payment was wholly or partly capital or revenue expenditure, would depend upon several factors like, whether the assessee had obtained a completely new plant with completely new process and technology ; whether the expenditure was for acquiring technical know-how…

Gkn Driveline (India) Ltd., Faridabad vs. DCIT, New Delhi

In the result, this ground of the assessee is allowed

ITA 1651/DEL/2014[2009-10]Status: DisposedITAT Delhi28 Sept 2016AY 2009-10

Bench: Shri R.S. Syal & Shri Sudhanshu Srivastavagkn Driveline (India) Ltd. Vs Acit Plot 270, Sector 24, Ltu, Faridabad. New Delhi. Aaacg4276B Assessee By Shri Manoj Pardasani & Shri Jatin Budhiraja, Cas Revenue By Shri Amrendra Kumar, Cit, Dr

Section 143(3)Section 14A

…AO had ITA No. 1651/D/14 Page 7 of 17 concluded that the payments made were capital in nature and accordingly, placing reliance on the decision of the Hon’ble Apex Court in Southern Switchgear Ltd. vs. CIT 232 ITR 359 and Jonas Woodhead & Sons (India) Ltd. 224 ITR 342, the AO made a net addition of Rs. 12,698,435/- towards royalty. The Ld. AR submitted that by way of the agreements, the assessee had obtained a right to use technical know-how for manufacturing CVJ’s in the assessee’s plant as well as the use of brand name “GKN” to sell its products. It was submitted that the technical know-how was required…

ACIT, New Delhi vs. M/S. Ge Capital Business Process Management Services Pvt. Ltd., New Delhi

In the result, the appeal of the assessee is allowed and that of Revenue is dismissed

ITA 2124/DEL/2013[2008-09]Status: DisposedITAT Delhi16 Oct 2015AY 2008-09

Bench: : Shri I.C. Sudhir & Shri L.P. Sahu

For Appellant: Shri Sanjeev Sabharwal, Sr. AdvFor Respondent: Shri A.K. Saroha, CIT/DR
Section 32Section 37

…t the information was not only in relation to use of license but co-ordination and connectivity services provided by GECC(USA). The AO, therefore, relying upon the decisions of Hon’ble Supreme Court in the case of Jonas Woodhead and Sons (India) Ltd. vs. CIT, 224 ITR 342 and Southern Switch Gear Ltd. vs. CIT, 232 ITR 359, concluded that acquisition of license granted by the licensor in itself is a capital asset being “intangible asset” and the payment made for acquisition of this license having long validity is of capital nature. The AO finally disallowed the deduction of Rs.2,19,60,467/- claimed as expenditure v…

Commissioner of Income Tax-IV vs. Hero Honda Motors Limited

ITA/694/2011HC Delhi03 Feb 2015

…ired for use of technical knowhow for a limited period, the payment would not bring into existence an asset of enduring nature. In this decision, reference was made to the decision of the Supreme Court in Jonas Woodhead & Sons (India) Ltd. vs. CIT (1997) 224 ITR 342, wherein it has been held that answer to the question whether a particular payment was wholly or partly capital or revenue expenditure, would depend upon several factors like, whether the 2015:DHC:1069-DB ITA 694, 696, 698, 699/2011 & 625, 633/2012 Page 8 of 20 assessee had obtained a com…

Commissioner of Income Tax vs. Bharti Hexacom Ltd

ITA/1328/2010HC Delhi19 Dec 2013

Bench: HON'BLE MR. JUSTICE SANJIV KHANNA,HON'BLE MR. JUSTICE SANJEEV SACHDEVA

…w that expenditure incurred was for several considerations i.e. there was overlapping of capital and revenue expenditure. This aspect has been examined in detail separately below. \i\ Jonas Woodhead ami Sons (India) Ltd. vs.. Commissioner of Income Tax (1997) 224 ITR 342 (SC), question arose whether 25% of the amount paid as royalty to the foreign company for technical informationy know how relating to setting up of a plant for manufacture of products was capital expenditure. Refcri'ing to the issue in question, it was observed that the answer would depend upon several factors including whether the assessee had s…

CIT vs. Bharti Hexacom Limited

ITA/996/2011HC Delhi19 Dec 2013

Bench: HON'BLE MR. JUSTICE SANJIV KHANNA,HON'BLE MR. JUSTICE SANJEEV SACHDEVA

…w that expenditure incurred was for several considerations i.e. there was overlapping of capital and revenue expenditure. This aspect has been examined in detail separately below. \i\ Jonas Woodhead ami Sons (India) Ltd. vs.. Commissioner of Income Tax (1997) 224 ITR 342 (SC), question arose whether 25% of the amount paid as royalty to the foreign company for technical informationy know how relating to setting up of a plant for manufacture of products was capital expenditure. Refcri'ing to the issue in question, it was observed that the answer would depend upon several factors including whether the assessee had s…

Commissioner of Income Tax vs. Bharti Telenet Ltd

ITA/1333/2010HC Delhi19 Dec 2013

Bench: HON'BLE MR. JUSTICE SANJIV KHANNA,HON'BLE MR. JUSTICE SANJEEV SACHDEVA

…w that expenditure incurred was for several considerations i.e. there was overlapping of capital and revenue expenditure. This aspect has been examined in detail separately below. \i\ Jonas Woodhead ami Sons (India) Ltd. vs.. Commissioner of Income Tax (1997) 224 ITR 342 (SC), question arose whether 25% of the amount paid as royalty to the foreign company for technical informationy know how relating to setting up of a plant for manufacture of products was capital expenditure. Refcri'ing to the issue in question, it was observed that the answer would depend upon several factors including whether the assessee had s…

CIT vs. Bhartihexacom Ltd

ITA/114/2012HC Delhi19 Dec 2013

Bench: HON'BLE MR. JUSTICE SANJIV KHANNA,HON'BLE MR. JUSTICE SANJEEV SACHDEVA

…w that expenditure incurred was for several considerations i.e. there was overlapping of capital and revenue expenditure. This aspect has been examined in detail separately below. \i\ Jonas Woodhead ami Sons (India) Ltd. vs.. Commissioner of Income Tax (1997) 224 ITR 342 (SC), question arose whether 25% of the amount paid as royalty to the foreign company for technical informationy know how relating to setting up of a plant for manufacture of products was capital expenditure. Refcri'ing to the issue in question, it was observed that the answer would depend upon several factors including whether the assessee had s…