Borrowing-related stamp duty and mortgage charges are revenue expenditure when incurred to secure business funds, not enduring assets.

Stamp duty and mortgage charges incurred to obtain business borrowing were treated as revenue expenditure because they were incidental to securing borrowed funds, not to acquiring an asset or enduring advantage. The purpose of the loan was held to be irrelevant where the expense was connected with obtaining the loan itself, so the disallowance was unsustainable and the expenditure was allowable in computing business income.

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Issues: Whether stamp duty and mortgage charges incurred for obtaining a loan secured by hypothecation and mortgage of assets were capital expenditure or revenue expenditure deductible in computing business income.

Analysis: The expenditure was incurred for securing the use of borrowed funds for business purposes, and not for acquiring an asset or advantage of an enduring nature. The object for which the loan was obtained was held to be irrelevant where the expense was incurred in connection with obtaining the loan itself. On the facts, the charges for stamp duty and mortgage were treated as incidental to borrowing and were not capital in character.

Conclusion: The disallowance was unsustainable and the expenditure was allowable as revenue expenditure.

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