9911796707
TMI Blog1954 (8) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... n the 30th May, 1930, and the second some fourteen years later, on the 22nd November, 1944. It appears that the assessee carries on a business of purchase and sale of mica. In the course of its assessment for the assessment year 1946-47, it claimed a deduction of ₹ 2,300 which it had paid as minimum royalty during the relevant accounting year, which was the calendar year 1945. This minimum royalty appears to have been paid under one or both of the two mining leases and the case of the assessee was that it was entitled to a deduction of the amount under section 10 (2)(xv) of the Income-tax Act on the basis that it was expenditure laid out or expended wholly and exclusively for the purpose of its business. The assessee was unable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... related or for the purpose of which the amount in question could be said to have been expended or laid out. It appears to have been argued before the Tribunal that the amount of the royalty was an allowable deduction, because it had been paid in order to safeguard a capital asset, namely, the mining leases. The Tribunal rejected that contention and held that since the business of mining mica had not yet commenced, the payment made to safeguard the capital asset of the mining leases could only be an expense in the nature of a capital expense. Before us it was contended on behalf of the assessee that the Tribunal had erred in holding that during the relative accounting year no business activity in connection with mining mica from the two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mines. The Appellate Tribunal has said that some prospecting operations had been conducted. At one stage of his argument, Mr. Mitra submitted that there must have been some mistake, inasmuch as in the case of mines, prospecting took place before a mining lease was obtained and in the present case, we were dealing with a stage subsequent to the obtaining of a lease and, therefore, any prospecting, which might have taken place, must have preceded the granting of the lease. Indeed, Mr. Mitra even pointed out a recital in the earlier lease that there had been a prior lease which was a prospecting lease. It appears, however, that both the leases expressly provide for some prospecting. Part II of the Schedule to the first lease enumerates the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, say what operations it had carried on during the relative year of account which, in its view, constituted business. As I have pointed out, nothing whatever appears to have been said at any stage. We have examined the grounds of appeal both before the Appellate Assistant Commissioner and before the Tribunal. They are perhaps models of conciseness, because beyond saying that the Income-tax Officer or the Appellate Assistant Commissioner had unreasonably disallowed the deduction claimed, they said nothing at all. Even in its application for a reference to this Court, when setting out the facts, according to its own version, the assessee did not disclose what its business operations in connection with mining mica had been during the year in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether it is possible to agree with that view, because it is sufficient for me to point out that the activities, upon which the Tribunal had relied in that case and which the High Court found sufficient to justify the Tribunal's finding, were of a numerous and varied character. The solitary and indefinite operation of prospecting, which we find in the present case and which was in its very nature preliminary even to the setting up of a business can bear no comparison with the detailed activities which had taken place in the Bombay case. The other ground on which the assessee relied was that, in any event, the amount in question was a revenue expense, inasmuch as it had been expended for the purpose of guarding or preserving the capi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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