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TMI Blog1942 (4) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case there was evidence before the Income-tax authorities on which they could come to the conclusion that the sum of ₹ 96,587, which has been included in the assessment, represented profits from trading in shares and not capital appreciation." On that question no argument has been addressed to us, and Sir Jamshedji Kanga for the assessee says that he does not wish to press the question, and agrees that it should be answered in the affirmative, that being the sense in which the Commissioner has answered it. So that we are only concerned with the second question, which is in these terms: "Whether in the circumstances of the case the sum of ₹ 3,28,645 paid by the assessee on behalf of the British Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s said, however, that the case may be brought within Section 10, because part of the business of the assessee consists in the promotion and financing of Companies, and that the object of this payment was to preserve such business and the assessee's reputation as a businessman, so as to secure income from future pro- motion of Companies. Dealing with the particular items of income derived by the assessee from this company, which as I have said, fall within Section 12 as income derived from other sources, a deduction can be made under Section 12(2) for any expenditure (not being in the nature of capital expenditure) incurred solely for the purpose of making or earning such income, profits or gains. It seems to me quite impossible to say ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aspect of the matter, I agree with the Commissioner of Income-tax in thinking that this is a capital expenditure. The maintenance of business reputation is undoubtedly a capital asset. Sir Jamshedji Kanga has relied on a recent decision in Southern (H.M. Inspector of Taxes) v. Borax Consolidated, Ltd., reported in the Supplement to the Income-tax Reports, Vol. X, (1942) p. 1 in which case Mr. Justice Lawrence held that where a sum of money was laid out for the acquisition or the improvement of a fixed capital asset, it was attributable to capital, but if no alteration was made in the fixed capital asset by the payment, then it was properly attributable to the revenue, being in substance a matter of maintenance, the maintenance of the capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 12 the decision of Mr. Justice Lawrence in Southern (H.M. Inspector of Taxes) v. Borax Consolidated, Ltd. [1942] 10 I.T.R. Suppl. 1. might have been helpful, if the facts were that the payment was made only to save certain property of the assessee. In the statement of case it is clearly stated that the assessee claimed that if he had not made the above gift, the Company would have failed, and he would have lost (1) his capital invested in the Company, (2) his salary of ₹ 1,000 per mensem as Managing Director, and (3) his business reputation and credit. It may be open to argument that the first two, namely, saving the capital invested in the Company and saving the salary, might be covered by the judgment of Mr. Justice Lawr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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