T. V. K. NATARAJA CHANDRAN, A.M.: In this appeal by assessee main issues raised are dealt with hereunder. first issue pertains to deduction under s. 80J of IT Act, 1961 in respect of profits and gains of newly established industrial undertaking. Grounds 1 & 2 cover issue. assessee claimed deduction of 6 per cent on gross capital employed on opening day of accounting year but ITO was of view that it should be allowed on net capital after deducting borrowings from gross assets. On this basis ITO found that there was only net deficiency of capital employed and, therefore, denied relief of Rs. 12,53,218 claimed by assessee. On appeal action of ITO was upheld by CIT(A) as he found that view taken by ITO was in accordance with provision of s. 80j as amended by Finance (No. 2) Act, 1980 which operated retrospectively with effect from 1st April, 1972. ld. Representative of assessee submitted that claim of assessee was to be admitted inasmuch as retrospectivity of amendment made by Finance (No. 2) Act, 1980 was under challenge before Supreme Court. On other hand, ld. Departmental Representative supported order of CIT(A). After due consideration and following precedent of Tribunal in this matter in other cases, we set aside order of CIT(A) on this issue and restore matter to his file for fresh adjudication in accordance with law and in light of decision of Supreme Court one way or other. second issue pertains to depreciation on Rs. 7,50,000 incurred by assessee on acquiring technical know-how. Grounds 3 & 4 cover issue. assessee incurred expenditure of asst. yr. 1976-77 Rs. 5 lakhs in previous year ending 31st July, 1975 and Rs. 2-1/2 lakhs in previous year ending 31st July, 1976 (asst. yr. 1977-78) amounting in all to Rs. 7,50,000 for acquiring technical data and technical know-how. claim of assessee before ITO was that expenditure resulted in capital asset namely "plant" and, therefore, depreciation was to be allowed on entire amount of Rs. 7,50,000. ITO was of view that expenditure related partly tot he erection of machinery and also to running of machinery after erection. Therefore, he was of view that depreciation at 10 per cent was admissible on 50 per cent of expenditure incurred. In this view of matter, therefore, he allowed depreciation of Rs. 37,500 only (10 per cent on Rs. 3,75,000). On appeal it was argued on behalf of assessee that ITO ought to h v e allowed either entire amount as revenue expenditure or allowed depreciation on entire amount but CIT(A) rejected first contention that t h e expenditure was incurred in earlier years and, therefore, could not be allowed in previous year relevant, for asst. yr. 1978-79. Further he considered that entire expenditure was capital in nature of which only 50 per c e n t resulted in creation of plant . For coming to this conclusion he was analysed break up of expenditure shown by assessee, which were reproduced in para 13 of his order, and came to conclusion that action of ITO in allowing depreciation on 50 per cent of expenditure resulting in creation of "plant" was quitted fair and judicious and assessee was not entitled to any further relief by way of depreciation. learned counsel for assessee has reiterated grounds taken. ld. Departmental Representative, on other hand, cited decision of Madras High Court in case of CIT vs. Eimco-K.C.P. Ltd. (1984) 147 ITR 603 (Mad) to urge that allotment of shares to foreign company in consideration of supply of know-how was not deductible as revenue expenditure and on merits supported order to CIT(A). We have duly considered rival contentions. assessee-company was floated in 1970 and it went into production in accounting year relevant for asst. yr. 1978-79. assessee-company entered into collaboration agreement with Bundy Corporation, U.S.A. on 4th Dec., 1970 for manufacture of copper connoted welded tubes. technical data and know-how and engineering drawings and other engineering date were to be furnished by Bundy Corporation in consideration of which assessee-company agreed to register in name of Bundy Corporation 10 per cent initial equity capital of Rs. 50 lakhs, i.e., Rs. 5 lakhs with option to acquire further 10 per cent of equity capital subject to approval of Government of India. We are informed that shares worth Rs. 5 lakhs were allotted in year 1973 and Rs. 2 lakhs in year 1976 in pursuance of agreement. Madras High Court in case relied upon by ld. Departmental Representative, viz., CIT vs. Eimco-K.C.P. Ltd. (supra), considered question whether allotment of enquiry shares of Rs. 2,35,000 to Eimco, American company, which promoted assessee company and agreed to contribute of share capital of company in consideration of its undertaking to supply technical know-how to assessee was allowable as business expenditure or not. It this connection it to be pointed out that American company was allotted further shares of Rs. 45,000 was for cash while remaining shares of Rs. 2,35,000 was for non-cash consideration, viz., supply of technical know-how to company. Madras High Court held that subscription of shares otherwise than for cash would not have effect of making non-cash consideration item of company s expenditure and it was not trading expenditure and offer of know-how by foreign company to assessee-company only represented its way of discharging its capital contribution for floatation of assessee-company and in that sense there was no expenditure. case of assessee before authorities was that expenditure was capital in nature as it brought into existence capital asset namely plant . Therefore, there is no question of allowing expenditure as revenue expenditure as such. break-up details of expenditure reproduced in order of CIT(A) show that part of expenditure had been incurred for engineering data and drawings and partly towards technical information and know-how and personnel training. Madras High Court has held in case o f CIT vs. Festo Elgi (P) Ltd. (1981) 129 ITR 499 (Mad) that Blue Prints, instructions, technical manuals etc., constituted tools for enduring benefit and formed part of capital assets with which assessee carried on its business. Therefore, they constituted "plant" for purpose of depreciation under s. 32 of IT Act, 1961. Applying test in case of assessee we find that entire expenditure was not for acquisition of plant . Clause (v) of letter of Government of India, Ministry of Industrial Development, Internal Trade & Co. Affairs dt. 27th Feb., 1970 according approval of coloration agreement show that foreign company would be allowed lump sum payment of Rs. 1.50 lakhs for design and engineering fees and no royalty or other payment would be allowed. Form this it can be inferred that value of engineering design and engineering fees could be Rs. 1.50 lakhs which has been estimated by Govt. of India. In this case CIT(A) has estimated 50 per cent of Rs. 7.50 lakhs as resulting in creation of "plant" and directed allowance of depreciation thereon. In our view, decision of CIT(A) is quite fair and judicious and in absence of any appeal by Revenue or cross objection by it, we uphold order of CIT(A) on this issue and we hold that assessee is not entitled to any further relief. third issue pertains to entitlement of investment allowance in respect o f technical know-how which has been acquired on payment of Rs. 7.50 lakhs and which is treated as "plant". According to ITO, claim of investment allowance on capitalised expenditure of Rs. 7.50 lakhs spent for acquiring technical know-how was not admissible as capitalisation was done in earlier years and not in relevant year for asst. yr. 1978-79. assessee paid Rs. 5 lakhs in accounting year ending 31st July, 1975 and Rs. 2.50 lakhs in accounting year ending 31st March, 1976 relevant for asst. yrs. 1976-77 & 1977-78 respectively. assessee admitted before CIT(A) that plant, resulting form expenditure of Rs. 7.50 lakhs, was installed in earlier accounting years and it was by mistake assessee did not claim investment allowance in earlier asst. yrs. 1976-77 & 1977-78. It was also stated by assessee that as assessment for asst. yr. 1977-78 was set aside by CIT by his revision order under s. 263 assessee could not agitate claim of investment allowance in course of fresh assessment before ITO. It is for these reasons CIT(A) held that he claim for investment allowance could not be made for asst. yr. 1978-79 and, therefore, upheld action of ITO. After hearing learned representative of parties and considering admitted position before CIT(A), we uphold order of CIT(A) on this issue and reject ground taken by assessee. In result, appeal is partly allowed for statistical purposes. *** BUNDY TUBING OF INDIA LTD. v. INCOME TAX OFFICER