TaxTMI 
TaxTMI 
1971 (9) TMI 53
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....known as the Virendra Talkies. It was run by M/s. Prakash Talkies Distributors, Delhi. The assessee entered into an agreement with M/s. Prakash Talkies Distributors under which it was agreed that in consideration of the assessee's paying a sum of Rs. 600 per month for a period of 5 years to M/s. Prakash Talkies Distributors, the latter would not exhibit any film at Virendra Talkies. In the assessment proceedings under the Income-tax Act, 1961, for the assessment year 1964-65 (the relevant accounting year being the calendar year ending on the 31st December, 1963) the assessee claimed a deduction of Rs. 7,200 paid during the year to M/s. Prakash Talkies Distributors under the aforesaid agreement. The Income-tax Officer and the Appellate As....
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....ge for the enduring benefit of the business it is properly attributable to capital and is of the nature of capital expenditure. If on the other hand it is made not for the purpose of bringing into existence any such asset or advantage but for running the business or working it with a view to produce the profits it is a revenue expenditure." It is not necessary that the words "permanent " or " enduring " refer to an advantage which will last for ever. That was made clear by Latham C.J. in Sun Newspapers Ltd. & Associated Newspapers Ltd. v. Federal Commissioner of Taxation : In Assam Bengal Cement Co. Ltd. the Supreme Court said that the right of an assessee to carry on its business unfettered by any competition from outsiders within th....
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....firmed the rejection of the claim by the income-tax authorities holding that the expenditure was in the nature of capital expenditure. By acquiring the unexpired permits, it pointed out, the assessee got rid of competition from private operators who were in the field prior to the acquisition. On behalf of the assessee, we have been referred to Mohanlal Hargovind v. Commissioner of Income-tax. The assessee carried on business as a manufacturer and vendor of country made cigarettes. For the purpose of his business he entered into short-term contracts with the Government and other owners of forests. Under the contracts, in consideration of certain sums payable by instalments, the assessee was granted the exclusive right to pick and carry aw....
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....red, which exhausted itself and was created to exhaust itself within the 12 months' period within which profits are ascertained, as constituting an enduring benefit or as an accretion to the capital or income earning structure of the business." Clearly the opinion turned on the consideration that no advantage of an enduring nature was brought into existence by the payment. Finally there is the decision of the Supreme Court in Commissioner of Income-tax v. Kiykend Coal Co. This decision need not detain us because on its facts it is distinguishable. It was concerned merely with expenditure incurred by the assessee on stowing certain galleries near the pit-mouth of the colliery as a condition precedent for working the colliery during the....