Capital expenditure on exclusive supply rights turns on the enduring character of the advantage acquired, not commercial pressure.

Lump sum payments made to secure exclusive supply rights for fixed terms were treated as capital outgoings rather than deductible revenue expenses. The decisive factor was the character of the advantage obtained: a single payment procured a continuing commercial benefit for periods of five to twenty-one years, pointing to an enduring asset or advantage instead of current trading expenditure. Where the arrangement was structured as a lease and sub-lease, its legal and commercial substance indicated acquisition of an interest in land, reinforcing the capital nature of the payments. Motive or commercial pressure was not determinative; the nature of the advantage acquired controlled the classification.

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Issues: Whether lump sum payments made to secure exclusive supply ties for periods of years, including where the arrangement took the form of lease and sub-lease, were capital outgoings or revenue expenses deductible in computing taxable profits.

Analysis: The payments were made as single lump sums to obtain a continuing commercial advantage for periods ranging from five to twenty-one years. They were not merely current trading outgoings or rebates, but were paid to secure a right of exclusive supply for a defined term. The length of the tie, the nature of the advantage obtained, and the means adopted to obtain it all pointed to acquisition of an asset or advantage of enduring character. Where the arrangement took the form of lease and sub-lease, the legal and commercial substance was an acquisition of an interest in land, which strengthened the capital character of the payments. The dominant consideration was the character of the advantage acquired, not the motive for making the payment or the commercial pressure under which it was made.

Conclusion: The lump sum payments were capital outgoings and not deductible revenue expenses; the appeals therefore failed.

Ratio Decidendi: A lump sum paid once for a lasting trading advantage or interest, obtained for a defined period and not as part of current trading operations, is capital expenditure where the nature of the advantage acquired is capital in character.

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