Lease brokerage for business premises is revenue expenditure where no enduring capital advantage arises.

Brokerage or commission paid to secure premises on lease for business use was treated as revenue expenditure where the lease was for a short and definite period and did not create an enduring capital advantage. The court held that such outlay formed part of the cost of obtaining business premises, including factory accommodation and residence for the sales manager, and was therefore not capital in nature. The amount was allowed as a deduction in favour of the assessee.

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Issues: Whether brokerage or commission paid for obtaining two premises on lease for business purposes was revenue expenditure and an admissible deduction.

Analysis: The expenditure was incurred to secure leasehold premises for locating the factory and for the residence of the sales manager. Following the binding view that expenditure incurred in obtaining premises on a lease for a short and definite period does not necessarily bring into existence an advantage of an enduring character, the amount spent on brokerage or commission was treated as part of the cost of securing the business premises and not as capital outlay.

Conclusion: The expenditure was held to be revenue in nature and allowable as a deduction, in favour of the assessee.

Ratio Decidendi: Brokerage or commission paid to obtain business premises on lease is deductible as revenue expenditure where the lease does not confer an enduring capital advantage.

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