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(ii) a person connected (within the meaning of section 10) with the person acquires knowhow used in the trade or the part of the trade,

(II) no amount of any royalty or other sum paid by the person referred to in subparagraph (i), or by any person connected (within the meaning of section 10) with that person, for the know-how acquired by the person referred to in subparagraph (ii) shall be allowed to be deducted in computing the profits of any description, or to be treated as a charge on income, of the person making such payment, and

(b) Where a person incurs expenditure on know-how for use in a trade carried on by the person or, having incurred expenditure on know-how, sets up and commences a trade in which it is used, there shall, subject to this section, be allowed to be deducted as expenses, in computing for the purposes of Case I of Schedule D the profits or gains of the trade, such part of the expenditure as would but for this section not be allowed to be so deducted.

“control” has the same meaning as in section 312;

(b) An election under paragraph (a) shall be made in the return required to be made under section 951 for the accounting period of the company in which the expenditure is incurred and shall not be made later than 12 months from the end of the accounting period in which the capital expenditure, giving rise to the claim, is incurred.