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TMI Blog1983 (12) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Reference No. 1 of 1971, is to the following effect: " Whether, on the facts and in the circumstances of the case, a demand of Rs. 1,07,837 by the assessee can be disallowed as capital expenditure ? " The common question, which has been referred to us in Income-tax References Nos. 19 of 1972 and 13 of 1973, is as under : "Whether, on the facts and in the circumstances of the case, the payment of Rs. 1, 20,775 and Rs. 2,14,795 made by the assessee to the State of Rajasthan can be allowed in assessment years 1953-54 and 1954-55 respectively under section 10(2)(xv) of the Indian Income-tax Act 1922 ?" The assessee is a registered company and in the year 1941 the assessee company entered into an agreement with the then ruler of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee company on account of royalty as specified above, on the ground that Such expenditure was "not incurred for the purposes of carrying on the business of the assessee-company. Thus, the claim of the assessee-company that such payments were of the nature of 'revenue'expenditure was disallowed. The finding of the Tribunal in this respect was that the expenditure incurred by the assessee-company regarding payment of royalty was made for acquiring an advantage of enduring nature for its business and thus the same was in the nature of capital expenditure. It was in the context of the aforesaid facts that the questions mentioned above have been referred to us by the Tribunal for our opinion. The assessee-company filed a civil suit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid by the company to the State Government during the assessment years 1952-53 and 1953-54, besides the amount relating to royalty for the earlier years. As we have already mentioned above, the assessee-company bad not made payment of the amount of royalty in respect of the assessment year 1954-55, but the company in that year made provision in its books of account for payment of the royalty amount in terms of the agreement. Thus, now, on account of the subsequent events enumerated above, the situation is that the assessee company has either not paid any amount by way of royalty or the amount of royalty paid has been refunded in respect of the three years, namely, 1952-53, 1953-54 and 1954-55. Whatever amount had been paid by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-company did not make any expenditure at all in this respect. In Indian Molasses Co. (Private) Ltd. v. CIT [1959] 37 ITR 66 (SC), their Lordships of the Supreme Court observed that " expenditure " in clause (xv) means expense and the idea behind it is of spending or paying money out or away. Their Lordships observed that to constitute an expenditure for purposes of clause (xv) of s. 10(2), the payment should be made irrevocably so that there should be no possibility of the money forming once again a part of the funds of the assessee-company. Thus, where no money was paid by way of royalty or the money paid on that account was received back by the assessee-company, it cannot be considered to be an "expenditure" incurred by the assessee- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dispute between the parties or though referred by the Tribunal does not arise out of its order. The High Court may also decline to answer a question arising out of the order of the Tribunal, if it is unnecessary or irrelevant or is not calculated to dispose of the real issue between the taxpayer and the department. " We are therefore of the view that in these reference cases, we should decline to answer the questions referred to us, since those questions have now become purely academic and would have no bearing on the situation as exists now and it would be wholly unnecessary for this court to go into those questions and answer them on account of the supervening events which have taken place during the long period in which these refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard to the fact that the assessee at whose instance the reference on that question has been made does not want to prosecute the same, we think it unnecessary to, consider that question and express our opinion thereon.. It is purely a matter of discretion, to answer or not to answer the question in the circumstances when a party who has caused a reference does not want to press the same." We are in respectful agreement with the aforesaid two decisions. In the circumstances of these cases, we hold that it would be wholly unnecessary for us to decide the questions which have now became merely of academic importance in the changed circumstances and, therefore, allow the request made by the assessee-company to withdraw the references. In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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