Enduring business advantage is capital expenditure, and a reconstructed publishing business does not qualify for industrial exemption.

Payment made to secure recognition of textbooks for sale in a new territory created an enduring business advantage and was therefore capital expenditure, not a revenue deduction. The fact that the payment was made by instalments did not change its character. The assessee's printing and publishing activity also did not qualify as a newly established industrial undertaking, because the later use of its own printing press was treated as a continuation and altered form of an existing business rather than a new undertaking. Exemption under section 15C was therefore unavailable. Both substantive tax questions were answered against the assessee.

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Issues: (i) Whether the amount paid to obtain recognition of text books for sale in a new territory was capital expenditure or revenue expenditure. (ii) Whether the assessee's printing and publishing activity constituted a newly established industrial undertaking entitled to exemption under section 15C.

Issue (i): Whether the amount paid to obtain recognition of text books for sale in a new territory was capital expenditure or revenue expenditure.

Analysis: The payment secured recognition enabling sales in a new territory and thus brought an advantage of enduring nature. Applying the settled distinction between expenditure incurred for running a business and expenditure incurred to acquire a lasting advantage, the source and mode of payment did not alter its character. The payment was made to acquire a valuable right for business expansion rather than for day-to-day operations.

Conclusion: The amount was capital expenditure and was not allowable as a revenue deduction; this issue was decided against the assessee.

Issue (ii): Whether the assessee's printing and publishing activity constituted a newly established industrial undertaking entitled to exemption under section 15C.

Analysis: The assessee was already carrying on the business of publishing books, and the later installation and use of its own printing press was treated as a continuation and altered form of the same business rather than a new business altogether. The exemption under section 15C was unavailable where the industrial undertaking was formed by reconstruction of a business already in existence. On the facts assumed, the activity fell within that restriction.

Conclusion: The assessee was not entitled to exemption under section 15C; this issue was decided against the assessee.

Final Conclusion: Both referred questions were answered against the assessee, and the revenue's position was upheld on the substantive tax issues.

Ratio Decidendi: Expenditure made to secure an enduring business advantage is capital in nature, and an industrial undertaking formed by reconstruction of a business already in existence does not qualify for the statutory exemption.

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