1934 (6) TMI 39

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..... 97 secured in perpetuity the exclusive right of quarrying slate in Kanhyara in the Village of the Kangra District. The company is also a shareholder in the Village Shamilat and as such enjoyed quarrying rights in common with the proprietary busy; but the essence of the company's business is that by reason of the lease it enjoys a monopoly of slate quarrying in this village. This monopoly has been recently assailed by the village proprietary body who on the 10th July, 1928 instituted a suit to eject the company from the quarries covered by the lease and also for an injunction to prevent the company from quarrying. On 11th July 1930 a decree was passed against the company by the trial Court and an appeal against that decree is pending .....

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..... d be no profits or gains. Further, he contends that the expenditure is debatable to revenue and it is not capital expenditure and that for these reasons the deduction is permissible under the clause. The opinion of the Commissioner is that since the subject-matter of the suit represents the capital of the company, the expenditure on litigation was incurred to defend the capitals of the business and must therefore, be deemed to be in the nature of capital expenditure. Accordingly he holds that no deductions can be permitted. No authority applicable to the facts of this case has been cited before us at the Bar. Counsel for the assessee has invited our attention to a British case reported as Ushers Wiltshire Brewery Ltd. v. Bruce, in which .....

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..... sought is capital or not is in its essence on of fact; and as such it is open to question whether this is a permissible reference to us under Section 66 of the Income Tax Act. But we have no doubt that this reference should be treated as involving a question of law. It should however be understood that in answering this reference we are not deciding any question of principle. But we are giving our opinion which is relevant solely to the facts of the case before us. The Income Tax Act does not contain any definition of the term capital expenditure nor has any definition been attempted in the various authorities cited at the Bar. The nearest approach to a definition of capital expenditure occurs in certain observations by LORD DUNEDIN in .....

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