1. COMMISSIONER OF INCOME TAX (CENTRAL) Vs. PADMINI TECHNOLOGIES LTD., ITA No. 1265/2007, Dated: 14th September 2011, DELHI HIGH COURT
Whether the expression 'total turnover of the business' in section 80-HHC would include only the turnover of the export business or also that of the domestic business - Whether while calculating the deduction u/s 80HHC, the turnover of the domestic unit also needs to be included.
That in so far as the two businesses were concerned, they were carried on in two separate undertakings. The assessee maintained separate books of accounts and also prepared separate profit and loss accounts and balance sheets; in the judgment of Madras Motors Ltd., the rationale given is that the word 'business' which follows the expression 'total turnover' would have to be confined to only those goods to which the section applies. Therefore, by necessary implication, the total turnover of business would only mean total turnover of business of goods to which the section applies. Inclusion of turnover of goods to which the section does not apply, would be doing violence to the language of sub-section (3)(b). Sub-section (3) is inserted only to determine the deductible profits out of the total profits of business which can be attributed to the export business.
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2. NICHOLAS PIRAMAL INDIA LTD Vs. JOINT COMMISSIONER OF INCOME TAX, ITA No. 4379/Mum/2005, Assessment Year: 1997-98, Dated: 29th April 2011, ITAT - Mumbai
Whether expenses incurred on procurement of technical know-how, which is directly related to marketing knowledge and information, are revenue expenditure particularly when the know-how is restricted to a certain period.
The purpose of acquiring such information was to avoid spending on a recurring basis, time, money and efforts in carrying out market surveys, appointing professionals and/or expert staff for working out marketing and sales strategies and forecasts and thereby reducing the learning period and augment the company's profits from the very first year. Thus, the expenditure incurred on acquisition of the information was out of commercial expediency and as a substitute for a series of other revenue expenses that would have to be incurred on appointing experts/professionals and conducting market surveys etc. on pharmaceutical products which is the existing line of business of the assessee. We also find force in the submission of the ld. Counsel for the assessee that the non-competition clause in case of the assessee is one of the routine clauses which is normally put in such agreements and cannot be interpreted to make the said payment made by the assessee to Max India as capital expenditure.
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