Legal fees to protect existing business interests qualify as revenue expenditure when no new asset or enduring advantage is created.

Legal expenses incurred in the ordinary course of an existing business to represent the assessee before the State Transport Authority and in writ petitions challenging permits granted to rival carriers were treated as revenue expenditure. The expenditure was incurred to protect and preserve existing business interests and income, and it did not create any new asset, monopoly, or enduring advantage. Accordingly, such legal fees were regarded as deductible revenue outgo, not capital expenditure.

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Issues: Whether legal fees incurred for representing the assessee before the State Transport Authority and in writ petitions challenging grant of permits to other carriers were admissible revenue expenditure.

Analysis: The expenditure was incurred in the course of carrying on the assessee's existing business and in furtherance of its corporate objects of watching over, promoting, and protecting the interests of its members. The litigation was aimed at preserving the income and business advantages already being enjoyed and did not bring into existence any new asset or enduring advantage. There was no material to show that the expenditure was for acquiring or preserving a monopoly, or that it was capital in nature.

Conclusion: The expenditure was admissible revenue expenditure and deductible.

Ratio Decidendi: Legal expenses incurred in the ordinary course of an existing business to protect and preserve its business interests, without creating a new asset or enduring advantage, are revenue expenditure.

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