Quarry lease rent deemed capital expenditure, not revenue. Precedents cited. Appeal dismissed.

The court held that the quarry lease rent paid for excavating granite for ten years constituted capital expenditure. The appellant's claim that it was revenue expenditure was rejected. The court emphasized that the lease was not solely for the right to excavate granite blocks but involved the acquisition of an enduring asset. Citing relevant precedents, including Gotan Lime Syndicate v. CIT [1966] 59 ITR 718 and Aditya Minerals Pvt. Ltd. v. CIT [1999] 239 ITR 817, the court upheld the decision that the expenditure was capital in nature. The appeal was dismissed, affirming the ruling in favor of the Revenue.

---

---

Issues Involved: Determination of whether the quarry lease rent paid for excavating granite on lease for ten years constitutes capital expenditure and whether the lease was solely for the right to excavate granite blocks.

Issue 1 - Capital Expenditure: The appellant, a partnership firm engaged in granite business, claimed lease rent as revenue expenditure for a quarry lease taken for ten years. The Assessing Officer treated the expenditure as capital. The appellate authority found no enduring asset acquired and allowed the claim as revenue. The Income-tax Appellate Tribunal, relying on precedent, deemed the expenditure as capital. The appellant argued that only the right to use raw material was conferred, and the initial lump sum should be revenue expenditure. The Supreme Court's distinction in Gotan Lime Syndicate v. CIT [1966] 59 ITR 718 was cited, where royalty payment was considered revenue expenditure. However, the Tribunal's decision was upheld based on Pingle Industries Ltd. v. CIT [1960] 40 ITR 67, leading to the dismissal of the appeal.

Issue 2 - Lease Nature: The lease in question was not for the land itself but for the right to excavate granite blocks under the surface for ten years. The appellant contended that as no enduring asset was acquired, the expenditure should be revenue. The Supreme Court's decision in Aditya Minerals Pvt. Ltd. v. CIT [1999] 239 ITR 817 was referenced, where a similar lease arrangement was considered capital expenditure due to a one-time payment. Following the precedent in Pingle Industries Ltd. v. CIT [1960] 40 ITR 67, the High Court ruled in favor of the Revenue, dismissing the appeal.

---