By TIOL News Service

CHENNAI, JUNE 16, 2018: THE ISSUE BEFORE THE DIVISION BENCH IS - Whether a manufacturer can simultaneously claim depreciation u/s 32 on technical know-how, once expenditure on such know-how was already granted u/s 35AB. NO IS THE VERDICT.

Facts of the case:

The assessee company, an abrasive manufacturer, had preferred present appeal challenging the action of ITAT in holding that deduction u/s 35AB having admittedly been granted, no depreciation could be allowed u/s 32 of the I-T Act.

Tribunal held that,

++ the question of whether an assessee can claim deduction u/s 35AB of the I-T Act of 1/5th of technical know-how fees and again capitalise the technical know-how fees along with the cost of plant and machinery and claim depreciation u/s 32 of the Said Act has been answered against the assessee by a Division Bench of this Court in Carborandum Universal Ltd. v. The Joint Commissioner of Income Tax, Chennai, reported in MANU/TN/2690/2012, where the Division Bench held that: "....As far as the question as to whether the assessee was entitled to depreciation or deduction u/s 35AB is concerned, it is seen from the documents placed before this Court that the expenditure incurred by the assessee was for the purpose of getting the technical know how by the assessee on manufacturing and processing of goods. Going by the provisions of Section 35AB and the Explanation on technical know how, we have no hesitation in holding that the assessee is entitled to the relief u/s 35AB only, and not to the claim of depreciation u/s 32...." The appeal is, therefore, not entertained.

(See 2018-TIOL-1125-HC-MAD-IT)