HINDUSTAN CIBA GEIGY LTD vs COMIUSSIONER OF INCOME TAX

DR. B.A SARAF, J.

By this reference under s. 256(1) of the IT Act, 1961 (the ''Act''), the Tribunal has referred the following two questions of law to this Court at the instance of the assessee for opinion.

"(i) Whether the amount of Rs. 9,28,328 representing fee for use of manufacturing know-how and for necessary training of the applicant''s personnel outside India, paid to Ciba Geigy Ltd., Basle, Switzerland, was allowable as a deduction for the asst. yr. 1974-75?

(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that surtax payable pursuant to the Companies (Profits) Surtax Act, 1964, was not an allowable expenditure in computing the total income for the year under reference?"

The learned counsel for the parties are agreed that in view of the decision of this Court in Commissioner of Income Tax Vs. Kirloskar Tractors Ltd., the controversy in the first question now stands concluded in favour of the assessee and thus following the same decision, question No. 1 should be answered in the affirmative and in favour of the assessee. Accordingly question No. 1 is answered in the affirmative and in favour of the assessee.

Counsel for the parties are further agreed that question No. 2 is covered by this Court''s decision in the case of Lubrizol India Ltd. Vs. Commissioner of Income Tax, and the decision of the Supreme Court in the case of Smith Kline and French (India) Ltd. and Others Vs. Commissioner of Income Tax, and following the same it should be answered in the affirmative and in favour of the Revenue. Accordingly, question No. 2 is answered in the affirmative and in favour of the Revenue.

This reference is accordingly disposed of with no orders as to costs.