Dead rent under mining leases is revenue expenditure when directly linked to business operations and not to an enduring capital advantage.

Dead rent paid under mining leases for coal fields that were not worked was treated as revenue expenditure and allowed as a deduction. The payment was annually payable, directly linked to the working of the coal and the royalty structure, and did not amount to additional capital outlay for acquiring leasehold rights or create an enduring capital asset or advantage. The fact that some fields remained unworked and the leases were long-term did not change its character, because the business was continuing and the expenditure was connected with raw material acquisition.

---

---

Issues: Whether dead rent paid in respect of coal fields which were not worked was an allowable deduction as revenue expenditure.

Analysis: The dead rent under the mining leases was annually payable and was directly related to the working of the coal and the royalty structure of the leases. It did not represent an additional capital outlay for acquiring the leasehold rights, nor was it expenditure made for bringing into existence an enduring asset or advantage independent of the business operations. The fact that some fields were not worked and that the leases were of long duration did not alter the character of the payment, since the assessee's undertaking had to be treated as a continuing business and the expenditure was connected with the raw material to be obtained.

Conclusion: The dead rent paid for the unworked coal fields was allowable as a deduction and was not capital expenditure.

Ratio Decidendi: Expenditure which is directly related to the working of a business asset and does not secure an enduring capital advantage is revenue expenditure, even if it is described as dead rent under a lease.

---