Capital expenditure on vacant possession of leased premises secured enduring possessory rights, not revenue deduction.

Payment made to obtain vacant possession of leased premises was treated as capital expenditure because it secured the extinction of the tenant's possessory rights and gave the assessee an enduring possessory advantage for business use. The fact that the payment removed an obstacle to trading operations did not change its character, as the expenditure was incurred to acquire or secure a valuable capital right rather than to meet routine business . It was therefore not allowable as revenue expenditure.

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Issues: Whether the sum of Rs. 4,50,000 paid to obtain vacant possession of leased premises was capital expenditure or revenue expenditure.

Analysis: The payment was made to procure the extinction of the tenant's possessory rights and to secure vacant possession of the premises for the assessee's business. The right obtained was not merely an incidental facilitation of trading operations; it was the acquisition of a valuable possessory right of an enduring character. Where expenditure is incurred to acquire or secure such a capital right, the mere fact that the payment is made to remove an obstacle to carrying on the business does not convert it into revenue expenditure.

Conclusion: The payment was capital expenditure and not allowable as revenue expenditure.

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