JUDGMENT

Prathiba M. Singh J.

1. The short question arising in the present appeal is - Whether the payment of Rs.1 Crore for exclusive use of the trade mark "HILTON" is to be treated as capital expenditure or revenue expenditure?

2. M/s. Hilton Roulands Ltd. (hereinafter `appellant') entered into Trade Mark license agreement dated 27th January, 1993 (hereinafter `first license agreement') which was later substituted with license agreement dated 9th November, 1995 (hereinafter `second license agreement') with M/s. Hilton Rubbers Limited (hereinafter `HRL'). The questions that arise in this case are to be adjudicated in the context of these agreements.

Brief Background

3. M/s Roulands Fabriker Denmark (hereinafter `RF') along with HRL and Industrialisation for Developing Countries, Copenhagen (hereinafter `IFU') formed the appellant as a joint venture in India. HRL owned 50% of the equity shares of the appellant, and RF and IFU held 26% and 24% respectively of the said joint venture. At the time when the joint venture was formed, the first license agreement dated 27th January 1993, was entered into, under which the appellant was granted by HRL license to use the Trade Mark HILT