N.L. Dash, Judicial Member. - The appeal filed by the revenue and cross objection by the assessee are directed against the appellate order dated 2-3-2007 passed by the CIT(A) - XL, Kolkata for the assessment year 2001-02.

"Revenue’s Appeal in ITA No. 1422/K/07

In its appeal the revenue has taken the following ground of appeal :—

(i)Whether the ld. CIT(A) has erred in the facts and the law by holding that the payment of Rs. 10,19,89,429 as ‘fees for Technical Know-How’ does not constitute ‘Royalty’?"

2. Before us, the ld. CIT-D/R submitted that the assessee is a German Company. On 7-11-1997 the assessee entered into 3 agreements with an Indian company viz. South Asian Petrochem Ltd. (SAPL) titled as Equipment Supply Agreement, Engineering and Know-how Supply Agreement and Technical Assistance Agreement. Referring to the preamble of the Engineering Technical Know-how Supply Agreement the ld. D/R pointed out that SAPL, the Buyer had decided to build and operate in India an industrial plant for commercial production of high viscous polyester, bottle grade chips having capacity of 400 M/Ts per day, employing the continuous poly condensation process. The said manufacturing process was