Capital expenditure on licence variation was not deductible, and no remittal was justified where the issue had already been open.

Legal expenses incurred to obtain a variation of an A licence were held to be capital expenditure because they improved the taxpayer's income-earning capacity by enlarging a business asset of enduring character, rather than meeting a revenue cost; the deduction was therefore disallowed under Schedule D. The request to remit the matter for further evidence was refused because the capital nature of the licence had already been squarely raised before the commissioners, and no adequate basis was shown for a fresh hearing.

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Issues: (i) Whether legal expenses incurred to obtain a variation of an A licence were deductible as revenue expenditure in computing taxable profits under Schedule D. (ii) Whether the matter should be remitted to the commissioners for further evidence on the character of the A licence as capital or revenue asset.

Issue (i): Whether legal expenses incurred to obtain a variation of an A licence were deductible as revenue expenditure in computing taxable profits under Schedule D.

Analysis: The expenditure was incurred to improve the taxpayer's capacity to earn income by enlarging the business asset represented by the A licence. The licence was treated as an asset essential to the carrying on of the haulage business and as bearing the characteristics of fixed capital rather than circulating capital. Expenditure directed to improving the capital position of the business was therefore attributable to capital and not income.

Conclusion: The expenditure was capital expenditure and was not deductible.

Issue (ii): Whether the matter should be remitted to the commissioners for further evidence on the character of the A licence as capital or revenue asset.

Analysis: The point that the licence was a capital asset had been squarely raised before the commissioners and was available for contest on the facts. No sufficient basis was shown for allowing the taxpayer to relitigate the matter by adducing fresh evidence after hearings before the commissioners, the judge and the appellate court. The circumstances did not justify a remittal.

Conclusion: The request for remittal was refused.

Final Conclusion: The legal expenses remained disallowable as capital outlay, and the appeal failed.

Ratio Decidendi: Expenditure incurred to obtain or improve a business asset of enduring character is capital in nature and is not deductible as revenue expenditure; a remittal will not be granted where the point was already open before the fact-finding authority and no adequate basis exists for a fresh hearing.

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