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1 - 8 of 8 (0.34 seconds)K.T.M.T.M. Abdul Kayoom And Anr. vs Commissioner Of Income-Tax on 23 November, 1961
This dictum has been followed and approval by this Court in
the cases of Assam Bengal Cement Co. Ltd. (supra); Abdul
Kayoom (supra) and Seth Sugancha.nd (supra) and several
other decisions of this Court. But, the test laid down by
Lord Cave has been explained in a number of cases which show
that the tests for considering the expenditure for the
purposes of bringing into existence, as an asset or an
advantage for the enduring benefit of a trade is not always
true and perhaps Lord Cave himself had in mind that the test
of enduring benefit of a trade would be a good test in the
absence of special circumstances leading to an opposite
conclusion. Therefore, the test laid down by Lord Cave was
not a conclusive one as Lord Cave himself did not regard his
test
323
as a conclusive one and he recognised that special circum-
stances might very well lead to an opposite conclusion.
Bombay Steam Navigation Co. (1953) ... vs Commissioner Of Income-Tax, Bombay on 21 October, 1964
In Bombay Steam Navigation Co. Pvt. Ltd. v. Commissioner
of Income Tax, Bombay, [1965] 1 SCR 770, the assessee pur-
chased. the
321
assets of another Company for purposes of carrying on pas-
senger and ferry services, it paid part of the consideration
leaving the balance unpaid. Under the agreement of sale the
assessee-had to pay interest on the unpaid balance of money.
The assessee claimed deduction of the amount of interest
paid by it under the contract of purchase from its income.
The court held that the claim for deduction of amount of
interest as revenue expenditure was not admissible. The
Court observed that while considering the question the
Court. should con-.. sider the nature and ordinary course of
business and the object for which the expenditure is in-
curred. If the outgoing or expenditure is so related to the
carrying on or conduct of the business, that it may be
regarded as an integral part of the profit-earning process
and not for acquisition of an asset or a right of a perma-
nent character, the possession of which is a condition for
the carrying on of the business, the expenditure may be
regarded as revenue expenditure. But, on the facts of the
case, the Court held that the assessee's claim was not
admissible, as the expenditure was related to the acquisi-
tion of an asset or a right of a permanent character, the
possession of which was a condition for carrying the busi-
ness.
R. B. Seth Moolchand Suganchand vs The Commissioner Of Income-Tax, Delhi on 19 September, 1972
The princi-
ples laid down in Suganchand's case do not apply to the
instant case.
Assam Bengal Cement Co. Ltd vs The Commissioner Of Income-Tax,West ... on 11 November, 1954
This dictum has been followed and approval by this Court in
the cases of Assam Bengal Cement Co. Ltd. (supra); Abdul
Kayoom (supra) and Seth Sugancha.nd (supra) and several
other decisions of this Court. But, the test laid down by
Lord Cave has been explained in a number of cases which show
that the tests for considering the expenditure for the
purposes of bringing into existence, as an asset or an
advantage for the enduring benefit of a trade is not always
true and perhaps Lord Cave himself had in mind that the test
of enduring benefit of a trade would be a good test in the
absence of special circumstances leading to an opposite
conclusion. Therefore, the test laid down by Lord Cave was
not a conclusive one as Lord Cave himself did not regard his
test
323
as a conclusive one and he recognised that special circum-
stances might very well lead to an opposite conclusion.
M. A. Jabbar vs Commissioner Of Income-Tax, Andhra ... on 23 November, 1967
In M.A. Jabbar v. C.I.T.
Andhra Pradesh, Hyderabad, [1968] 2 SCR 413, the assessee
was carrying on the business of supplying lime and sand, and
for the purposes of acquiring sand he had obtained a lease
of a river bed from the State Government for a period of 11
months. Under the lease he had to pay large amount of lease
money for the grant of an exclusive right to carry away sand
within, under or upon the land. The assessee in proceedings
for assessment of incometax claimed deduction with regard to
the amount paid as lease money. The Court held that the
expenditure incurred by the assessee was not related to the
acquisition of an asset or a right of permanent character
instead the expenditure was for a specific object of ena-
bling the assessee to remove the sand lying on the surface
of the land which was stock-in-trade of the business, there-
fore, the expenditure was a revenue expenditure.
Whether payments made by an assessee for removal of any
restriction or obstacle to its business would be in the
nature of capital or revenue expenditure, has been consid-
ered by courts.
Section 256 in The Income Tax Act, 1961 [Entire Act]
M/S. Gotan Lime Syndicate vs Commissioner Of Income-Tax, Delhi And ... on 15 November, 1965
In Gotan Lime Syndicate v. C. I. T., Rajasthan & Delhi,
[1966] 59 ITR 7 18, the assessee which carried on the busi-
ness of manufacturing lime from limestone, was granted the
right to excavate limestone in certain areas under a lease.
Under the lease the assessee had to pay royalty of Rs.96,000
per annum. The assessee claimed the payment of Rs.96,000 to
the Government as a revenue expenditure. This Court after
considering its earlier decision in Abdul Kayoom's case
(supra) and also the decision of Lord Cave in British Insu-
lated (supra), held that the royalty paid by the assessee
has to be allowed as revenue expenditure as it had relation
to the raw materials to be excavated and extracted. The
Court observed that the royalty payment including the dead
rent had relation to the lime deposits. The 'Court observed
although the assessee did derive an advantage and further
even though the advantage lasted at least for a period of
five years there was no payment made once for all. No lump
sum payment was ever settled, instead, only an annual royal-
ty and dead rent was paid. The Court held that the royalty
was not a direct payment for securing an enduring benefit,
instead it had relation to the raw materials to be obtained.
In this decision expenditure for securing an advantage which
was to last at least for a period of five years was not
treated to have enduring benefit.
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