Temporary suspension of film exhibition business did not break continuity; related hire, repair and legal expenses remained deductible.

Film exhibition and distribution were treated as closely allied business activities, so a temporary stoppage caused by theft of machinery did not amount to a final discontinuance of business. On that basis, hire charges, repair charges and legal charges incurred to preserve and carry on the business structure were regarded as business expenditure rather than costs of a closed or abandoned undertaking. The expenses were held allowable under section 10(2)(v) and section 10(2)(xv) of the Indian Income-tax Act, 1922, with the result favouring the assessee.

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Issues: Whether the hire charges, repair charges and legal charges incurred in relation to the film exhibition activity were allowable as business expenditure where the exhibition activity had temporarily stopped because the machinery had been stolen, and whether the exhibition and distribution activities formed one business for the purpose of deduction.

Analysis: The claim turned on whether there was a real discontinuance of the business or only a temporary suspension caused by theft of the machinery. The relevant business activities were closely allied, and the stoppage of exhibition was not treated as a final cessation of business. The hire charges had also been paid in earlier years, and the expenditure on hire, repairs and litigation was connected with the carrying on and preservation of the business structure rather than with a closed or abandoned business.

Conclusion: The expenses were allowable under section 10(2)(v) and section 10(2)(xv) of the Indian Income-tax Act, 1922, and the answer was in favour of the assessee.

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