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Technical Know how
Dear Colleagues,
One of my clients had transferred his technical knowledge and received an amount of Rs.10 Lakhs. This amount is for transfer of his technical knowledge base only and not for the transfer of right to manufacture.
The issues are :
1) Is this amount a revenue receipt or capital receipt in the hands of recipient?
2) Is there any capital gain liability (the cost of acquisition is ZERO) ?
3) Is the assessee receiving technical know-how can claim depreciation on this amount of
Rs. 10 Lakhs?
Please clarify and quote the case laws if any.
Replies (1)
Since you said that there is "transfer of Knowledge", then there will be definitely be capital gains because transfer includes all kinds of transfer except those exceptions specified. Therefore it is an income and not a capital reciept. This is self generated asset and thus cost of acquisition is zero.(Sec 55(2)(a)). The purchaser of the Knowledge shall be entitled to claim depreciation as it an intangible asset.
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