Bank guarantee commission for release of trading stock is revenue expenditure when linked to sale and income realisation.

Bank guarantee commission paid to secure release of seized stock-in-trade was treated as revenue expenditure because it was incurred to protect trading assets, facilitate their sale, and realise business income. The payment was not for acquiring a capital asset or securing any enduring advantage, but was integrally connected with the assessee's business operations. On that basis, the commission was allowable as a business deduction and the disallowance was deleted.

---

---

Issues: Whether bank guarantee commission paid for obtaining release of seized stock-in-trade from the department was allowable as revenue expenditure.

Analysis: The commission was paid to secure release of trading stock so that it could be sold and converted into income. The stock was ultimately sold and the resulting profit was offered to tax. The payment was not for acquiring a capital asset or an enduring advantage, but was incurred to protect and facilitate the assessee's business operations and the realization of business income.

Conclusion: The expenditure was held to be revenue expenditure allowable as a business deduction.

Final Conclusion: The addition disallowing the bank guarantee commission was deleted and the Revenue's appeal failed.

Ratio Decidendi: Expenditure incurred to secure release of trading stock for sale and income realization, where it is integrally connected with business operations and not for acquisition of a capital asset, is revenue expenditure.

---