Whether the entire licence fee received by the assessee for granting the right to use technical know-how could be taxed in the year of receipt or it could be spread over period of contract?
The High Court held as under:
1)The income had duly accrued or arisen in the year of receipt of license fee. The assessee did not have any obligation or responsibility to carry out further activity or to perform any new task, after the agreement dated 14th July, 1995 was executed, towards know-how or technology.
2)What was permitted and allowed to ETL (‘ to whom technology was made available) was the right to continue use of such design engineering component for a period of three years, in spite of disengagement and termination of the joint venture agreement;
3)The amount paid under the agreement was not an advance relating to unperformed obligation, which had to be performed or undertaken. A payment would be an advance or deposit if the said amount was repayable or the person receiving the deposit as advance had to perform and render services post deposit in future.
4)However, in the instant case the assessee did not have any obligation or responsibility to carry out further activity or to perform any new task, after execution of agreement. Therefore, the entire licence fee was taxable in the year of receipt. - NEW HOLLAND TRACTORS (INDIA) (P.) LTD. V.CIT  49 taxmann.com 573 (Delhi)