Revenue expenditure on obtaining new premises was deductible because it enabled business continuity without creating an enduring capital asset.

Payment made to obtain new business premises, where it was not shown to secure any enduring advantage or fixed-term lease, was treated as revenue expenditure. The amount was incurred to enable the business to continue after the earlier branch had to be vacated under rent control proceedings, so it was connected with the carrying on of business rather than the creation of a capital asset. It was therefore deductible in computing business income.

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Issues: Whether the sum of Rs. 1,001 paid to the landlord for obtaining the new premises was capital expenditure or revenue expenditure, and therefore deductible in computing business income for the assessment year 1962-63.

Analysis: The payment was not shown to have been made for bringing into existence an asset or advantage of an enduring character. There was no material to indicate that it secured the lease for any fixed term of years. On the facts, the expenditure was incurred to enable the business to continue in new premises after the earlier branch had to be vacated under rent control proceedings. The payment was thus connected with the carrying on of the business and was not directed to creating a capital asset.

Conclusion: The sum of Rs. 1,001 was revenue expenditure and was deductible in arriving at the assessee's business income.

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