Lease premium on long-term lease treated as capital expenditure; earlier erroneous acceptance did not bind the Revenue in later years.

Lease premium paid for a long-term lease was treated as capital expenditure because it secured enduring leasehold rights, exclusive possession, construction rights and other proprietary incidents, while the annual rent remained separately payable and revisable; the amortisation claim as revenue expenditure therefore failed. The Court distinguished authorities relied on by the assessee as fact-specific and held that the payment was not merely deferred rent but a capital outlay within the distinction between premium and rent under Section 105 of the Transfer of Property Act. On consistency, it held that income-tax proceedings are not governed by res judicata and that an earlier erroneous acceptance cannot bind the Revenue in later years.

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Issues: Whether the amortization of lease premium paid for a long-term lease was allowable as revenue expenditure, and whether the Revenue was bound by the earlier acceptance of the same treatment on the principle of consistency.

Analysis: The lease premium was a substantial one-time consideration paid to secure long-term leasehold rights with exclusive possession, construction rights, and limited proprietary incidents, while annual rent was separately stipulated and periodically revisable. Applying the distinction between premium and rent under Section 105 of the Transfer of Property Act, the payment was held to be for acquiring an enduring advantage in the capital field and not merely deferred rent. The authorities relied on by the assessee were treated as fact-specific and distinguishable. On consistency, the Court held that there is no res judicata in income-tax proceedings and that an earlier erroneous view cannot bind the Revenue in later years.

Conclusion: The lease premium was capital expenditure and not allowable as revenue expenditure, and the plea based on consistency failed.

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