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Issues:
Allowability of expenditure incurred in carrying on a mica business that was stopped due to a cyclone against profits of the assessee's other business. Analysis: The case involved a company carrying on business in motor accessories and mica mining, specifically focusing on a sum of &8377; 5,420 claimed as a deduction for expenses incurred in the mica business. The mica mining business was halted in 1927 due to a cyclone, and the company, with the intention to resume production, incurred expenses in 1928-29. The Income Tax Officer disallowed the deduction, considering it a capital loss, as the mica business was not resumed. The key question was whether the expenses incurred could be considered as a loss incurred in the course of business. The court emphasized that the company's objective was to search for and work on mica, and the expenses were aimed at resuming production. The court rejected the argument that the business had ceased, highlighting that prospecting work was done with the existing staff to assess the feasibility of resuming production. The court distinguished this case from others where entirely new businesses were started. It concluded that the expenditure incurred in 1928-29 was related to carrying on the mica business, making it allowable as a deduction against the profits of the company's other business. The court's decision was based on the interpretation of Section 10, emphasizing that for a loss to be allowable, it must result from carrying on a business. The court rejected the Commissioner's argument that since the mica business had not been resumed, the expenses were of a capital nature. The court highlighted that the company's actions, including maintaining staff and conducting prospecting work, indicated an intention to resume the mica business. It was crucial for the court that the company's objective was to continue the mica business, and the expenses were incurred with that purpose in mind. The court emphasized that each case's determination of whether a business was being carried on should be based on its specific facts rather than a general legal theory. The court's decision to allow the deduction was supported by the company's continuous efforts to assess the feasibility of resuming mica production, indicating an ongoing business activity despite the temporary halt due to the cyclone. In conclusion, the court ruled in favor of the assessee, allowing the deduction of &8377; 5,420 against the profits and gains of the assessee's other business. The court awarded costs to the assessee and ordered a refund of the deposited amount. The unanimous agreement of all judges on the decision emphasized the clarity and correctness of the interpretation of the law in this specific case.
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