Temporary business suspension does not end continuity, so rent and salary expenses during dormancy remain deductible.

A temporarily suspended business is not treated as discontinued where the licence and surrounding records show only interim dormancy, continued contest of the suspension, and later renewal of the existing licence. On that basis, rent and salary expenses incurred during the suspension period retained their revenue character and remained allowable as business expenditure because they were incidental to an existing business that had not been finally brought to an end.

---

---

Issues: Whether the business was discontinued during the period of suspension by the District Magistrate or merely remained dormant so that the rent and salary expenditure incurred during that period was allowable as business expenditure.

Analysis: The licence and surrounding records showed that the exhibition business was only suspended temporarily by the Magistrate's order and was not finally brought to an end. The assessee continued to contest the matter and ultimately obtained renewal of the old licence, which supported the position that the business was only inactive for the interim period. Expenditure such as rent and salaries incurred during such dormancy remained incidental to the business and did not lose its revenue character merely because the business was not then operating actively.

Conclusion: The business was not discontinued and the disputed expenditure was allowable; the finding is in favour of the assessee.

Ratio Decidendi: Where a business is temporarily suspended but continues in existence and is later revived by renewal of the existing licence, expenditure incurred during the period of dormancy remains deductible as business expenditure.

---