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Issues: Whether the assessee is entitled to deduct the amounts paid for acquiring exclusive rights to collect conch shells as expenses for the purpose of calculating assessable income.
Analysis: The judgment deals with the question of whether the amounts paid by the assessee for acquiring exclusive rights to collect conch shells can be considered as deductible expenses for calculating assessable income. The assessee acquired these rights from the Rajah of Ramnad and the Zamindar of Sivaganga for different sums. The Income-tax authorities treated these amounts as capital expenditure and disallowed the deduction. The assessee argued that the payments should be allowed as deductions under Section 10(2)(ix) of the Indian Income-tax Act, 1922. The Court referred to previous decisions, including Commissioner of Income-tax, Madras v. Chengalvaraya Mudaliar, where it was held that similar payments were capital expenditure. The Court emphasized the distinction between spending money to acquire a concern and spending money for the concern itself, stating that the payments in this case were for acquiring the means of obtaining material for the business, not the material itself. The Court also considered the case of Golden Horse Shoe (New) Ltd. v. Thurgood, where it was held that payments made for acquiring the right to extract gold from dumps were not capital expenditure as the dumps were part of the company's stock-in-trade. Applying this reasoning to the present case, the Court concluded that the amounts paid by the assessee for the right to collect conch shells were expenses of a capital nature and therefore not permissible deductions for calculating assessable income. The judgment reaffirmed the decisions in previous cases, including Commissioner of Income-tax, Madras v. Chengalvaraya Mudaliar and Commissioner of Income-tax, Madras v. Messrs. P.T. Chengalvaraya Chettiar and P.L.M.M.V.S. and Company, Madras. In conclusion, the Court held that the sums paid by the assessee, amounting to &8377; 10,500 and &8377; 350, for acquiring exclusive rights to collect conch shells were capital expenses and thus not eligible for deduction in calculating assessable income. The judges, Mockett and Krishnaswami Ayyangar, concurred with this decision, upholding the view that such payments constitute capital expenditure and are not allowable as deductions for income tax purposes.
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