Question

How to verify technical knowhow

Answer 1

A straight forward judjement cannot be give that whether Technical Know-How is an Asset or an Expenditure.   First of all, technical know-how is an intellectual property right which is nothing but the techincal knowledge for carrying out any process and such knowledge is available with some specific people who have the know-how patented.   Now, whether to classify it as asset or expenditure depends upon the nature of transaction. If you pay for the technical know-how on consultancy basis then it shall be classified as revenue. In case you purchase the technical know-how from the person having it say for a period of 10 years, then it shall be classified as Intangible Asset. Depreciation is available under Income Tax Act @ 25% on WDV method for such assets.

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