1966 (10) TMI 16

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..... ic limited company carrying on coal mining business, took over as a going concern the business of Hyderabad-Deccan Co. Ltd., for a sum of 45 lakhs, and have since then been working the mines. The assets of the company comprise of mining leases entered into with the then Government of Hyderabad, under which yearly payments of what is known as " dead rent " has to be paid separately under each of the leases. For the six assessment years 1954-55, 1955-56, 1956-57, 1957-58, 1958-59 and 1959-60 dead rents of Rs. 45,521 for each of the first four years, Rs. 67,214 for 1958-59 and Rs. 2,08,468 for 1959-60, were claimed as deductions under section 10(2)(xv) of the Income-tax Act, 1922, as revenue expenditure. Those amounts were disallowed by the In .....

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..... arly stated, it has always been a matter of great difficulty in applying these principles and ascertaining what in a given set of circumstances or given set of facts amounts to capital expenditure or revenue expenditure. There is in fact no single decisive test, the application of which would give the answer one way or the other. Their Lordships of the Supreme Court in Gotan Lime Syndicate v. Commissioner of Income-tax approved the following tests laid down in Atherton v. British Insulated and Helsby Cables Ltd., viz. : " But when an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of the trade, I think that there is very good reason (in the abse .....

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..... his, the assets of the company so acquired contained 16 leases of coal bearing areas under each of which dead rent has to be paid annually. This annual rent is relatable to the royalty to be paid on winning the coal, that is to say, in each of the cases, the rent is at the rate of minimum royalty whether the field is worked or not. The dead rent for one year is computed in the same manner as if quantity of coal sufficient according to the said royalties to produce that sum had been actually worked, got and won. These clauses indicate clearly and without doubt that the dead rent has a direct relation with the working of the coal. Two points have been urged by the learned advocate for the department ; firstly, that their Lordships of the Su .....

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