1969 (2) TMI 37 - HC - Income Tax

Assessee obtained a lease of a new building and, in doing so, he had to pay a sum of Rs. 1,001 to the landlord as an extra payment over and above the stipulated rent, which was not refundable - object of the assessee, was merely, by incurring the business expenditure, to produce profits and not to create any asset of a capital character - hence it is deductible in arriving at the assessee s income

Summary

The judgment concerns the character of an outgoing of Rs. 1,001 as capital or revenue expenditure for the assessment year 1962-63. The assessee, engaged in garment manufacturing, paid the amount to a landlord for a new building lease. The Tribunal allowed the deduction as revenue expenditure, finding it akin to rent payment. The court agreed, stating the expenditure was for continued business operations, not to create a capital asset. The reference was answered against the revenue with costs.