Judgment :- P.JYOTHIMANI,J. 1. The Revenue has filed the Tax Case Appeal against the order of the Income Tax Appellate Tribunal Madras D Bench dated 10.05.2002 in ITA.No.530(Mds)/94 raising the following substantial question of law:- "Whether the amount of Rs.11,39,195/-paid by the assessee for the purchase of design and drawings is an allowable expenditure under Section 37(1) of the Act or for deduction under Section 35 AB of the Act?" 2. The assessment year herein relates to 1990-91. The assessee is stated to have paid Rs.11,39,195/- for purchase of designs and drawings. Out of the said amount, Rs.10,39,195/- was paid to M/s.Graff Sales, Switzerland for getting the designs and drawings for manufacture of opening roller, while the remaining amount of Rs.1,00,000/-was paid to M/s.Indranil Consultants, Bombay as a consultancy charge. The assessee claimed deduction of the entire amount of Rs.11,39,195/-under Section 37(1) of the Income Tax Act, 1961 (hereinafter called as the "Act"). 3. The Assessing Officer while considering the amounts spent towards purchase of designs and drawings and towards consultancy charge as the amounts spent for the purchase of obtaining technical know-how and considered the amounts spent under the provisions of Section 35 AB of the Act and accordingly allowed only 1/6 of the amount viz., Rs.4,69,289/- as deduction. Aggrieved by the same, the assessee filed appeal before the Commissioner of Income Tax (Appeals), who, reversed the order of the Assessing Officer and held that the assessee would be entitled for deduction for the entire amount under Section 37(1) of the Act. To arrive at such a conclusion, the First Appellate Authority has held that the sum of Rs.1,00,000/-being the expenditure incurred for market survey of raw-materials used in the assessees business, it should be allowed as a business expenditure under Section 37(1) of the Act. He further held that the other amount of Rs.10,39,195/-which was also a lumpsum payment made for getting the designs and drawings from Graf Sales Limited for manufacture of opening roller and the assessee by incurring the expenditure, has only increased its product range in an existing business and the amount could not be covered by the language of Section 35AB of the Act. 4. Aggrieved by certain portion of the order in terms of non-allowance of deduction, the assessee filed appeal and against certain portion of allowance of deduction, the Revenue has also filed appeal before the Income Tax Appellate Tribunal. 4. Aggrieved by certain portion of the order in terms of non-allowance of deduction, the assessee filed appeal and against certain portion of allowance of deduction, the Revenue has also filed appeal before the Income Tax Appellate Tribunal. The order of the Commissioner of Income Tax (Appeals) came to be confirmed by the Income Tax Appellate Tribunal. As against the same, the Revenue has filed the present appeal. 5. On a reference to the impugned order of the Tribunal, we find that for arriving at the conclusion in granting deduction under Section 37(1) of the Act, the reasons assigned by the Tribunal are not in accordance with law. In fact, the Tribunal has not even chosen to consider Section 35 AB of the Act and the Explanation annexed therein. For better understanding, Section 35AB is extracted as under:- "35AB(1) Subject to the provisions of sub-section (2), where the assessee has paid in any previous year any lump sum consideration for acquiring any know-how for use for the purposes of his business, one-sixth of the amount so paid shall be deducted in computing the profits and gains of the business for that previous year, and the balance amount shall be deducted in equal instalments for each of the five immediately succeeding previous years. Explanation - For the purposes of this section, "know-how" means any industrial information or technique likely to assist in the manufacture or processing of goods or in the working of a mine, oil well or other sources of mineral deposits (including the searching for, discovery or testing of deposits or the winning of access thereto)." 6. A reading of the said provision makes it clear that the amount paid by the assessee was towards acquiring technical know-how to increase its product range of its business and therefore, 1/6th of the amount stands deducted while computing the profits and gains of the business for that previous year and the balance amount shall be deducted in equal instalments deducted for each of the five immediately succeeding previous years. A reading of the Explanation show that the term "know-how" had got wider connotation which includes any industrial information or technique which is likely to assist in the manufacture or processing of goods. A reading of the Explanation show that the term "know-how" had got wider connotation which includes any industrial information or technique which is likely to assist in the manufacture or processing of goods. While so, it is not known how the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal have come to the conclusion that the amount of Rs.10,39,195/-which was paid to M/s.Graff Sales, Switzerland towards purchase of designs and drawings would not come under technical know-how. However, rightly, the Assessing Authority held that the said amount was spent only in respect of acquiring technical know-how for increasing its product range of its business. 7. Under similar circumstances, this Court in the case of Commissioner of Income Tax Vs. Drilcos (India) Pvt Ltd reported in (2004) 266 ITR 12, held that any expenditure incurred for acquiring know-how has to be treated in accordance with Section 35 AB of the Act. Further this Court had observed as under:- "This court had occasion to consider Section 35AB in the case of CIT Vs. Tamil Nadu Chemical Products Ltd., (2003) 259 ITR 582. It was held therein that "irrespective of whether it is a capital or revenue expenditure", the expenditure incurred for the purpose of acquiring know-how was required to be treated only in accordance with Section 35AB and the deduction that was allowable was one-sixth of the amount paid as lumpsum consideration for acquiring the know-how." 8. Applying the decision above cited, we hold that the payment of the amount of Rs.10,39,195/- made by the assessee to M/s.Graff Sales, Switzerland for the purpose of purchase of designs and drawings attracts Section 35AB of the Act. Accordingly, the findings of both the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal in this regard are set aside. The order of the Assessing Authority is restored. 9. As far as the reliance placed on by the learned counsel for the assessee in the assessees own case reported in (1984) 149 ITR 712, the same have no relevance to the present case on hand since the same was before the introduction of Section 35AB of the Act. Section 35 AB of the Act was inserted by the Finance Act, 1985 with effect from 01.04.1986. 10. Section 35 AB of the Act was inserted by the Finance Act, 1985 with effect from 01.04.1986. 10. In so far as the amount of Rs.1,00,000/-stated to have been paid by the assessee to M/s.Indrail Consultants, Bombay is concerned, the same is admittedly paid as a consultancy charge. It is not in dispute that the said sum was incurred for market survey of raw-materials used in the assessees business. As per the Explanation to Section 35AB of the Act, we are of the view that the said amount paid as consultancy charge cannot be treated as an amount spent in getting know-how or technique likely to assist in the manufacture or processing of goods i.e., augmenting the business of the assessee. Accordingly, we confirm the view of the Income Tax Appellate Tribunal and the same is allowed as a business expenditure under Section 37(1) of the Act. 11. In the result, the Tax Case Appeal stands partly allowed and the substantial question of law is answered partly in favour of the Revenue and partly in favour of the assessee. No costs.