9911796707
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Issues Involved:
1. Whether the expense of Rs. 16,707 incurred by the assessee company for the initial registration of its "old" trade marks was rightly held to be attributable to revenue expenditure. 2. If it was revenue expenditure, whether it was incurred wholly and exclusively for the purposes of the assessee company's business. Detailed Analysis: Issue 1: Nature of Expenditure - Revenue or Capital The primary issue was to determine if the Rs. 16,707 spent by the assessee company on the initial registration of its "old" trade marks should be classified as revenue expenditure or capital expenditure. The court examined the Trade Marks Act, 1940, its definitions, and the procedures for registration, renewal, and the rights conferred by registration. The court noted that the registration of a trade mark provides the proprietor with exclusive rights, but these rights are not permanent and require periodic renewal. The court referenced several cases, including British Insulated and Helsby Cables v. Atherton, which established that expenditure resulting in an asset or advantage for the enduring benefit of a trade is typically capital expenditure. However, the court distinguished this case by noting that the registration fees did not create a new asset or alter the nature of the existing trade marks. Instead, the fees were recurrent and necessary to maintain the trade marks' protection, similar to routine expenses for maintaining business premises. The court concluded that the registration fees did not bring into existence an asset or advantage for the enduring benefit of the trade, as the benefits of registration were temporary and required periodic renewal. Therefore, the expenditure was classified as revenue expenditure. Issue 2: Expenditure Incurred Wholly and Exclusively for Business Purposes The second issue was whether the expenditure was incurred wholly and exclusively for the purposes of the assessee company's business. The court found no evidence suggesting that the trade marks were used for any purpose other than the company's business. The expenditure was incurred solely for the registration of the trade marks, which was essential for the company's operations. The court referenced the Privy Council's test in Tata Hydro-Electric Agencies, Ltd. v. Commissioner of Income Tax, which requires that the expenditure be for the purpose of producing profits in the conduct of the business. The court determined that the registration fees were part of the company's working expenses and essential for profit-earning, thus meeting the criteria for being incurred wholly and exclusively for business purposes. Conclusion: The court answered both questions in the affirmative: 1. The expense of Rs. 16,707 incurred by the assessee company for the initial registration of its "old" trade marks was rightly held to be attributable to revenue expenditure. 2. The expenditure was incurred wholly and exclusively for the purposes of the assessee company's business. The Commissioner was ordered to pay the costs.
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