In the accounting years 1944 45 and 1945 46 the companypany paid its lessor sums of Rs.
5,000 Rupees five thousand only annually during the period of the lease on November 15th starting from November 15th, 1938, as a protection fee.
35,000 paid under clauses 4 and 5 of the deed of the 14th November, 1938, were rightly disallowed as being expenditure of a capital nature and so number allowable under section 10 2 xv of the Indian Income tax Act .
In addition to these rents and royalties two further sums were payable under the special companyenants companytained in clause 4 and 5 of the lease as protection fees .
Under clause 4 the protection was in respect of another group of quarries called the Durgasil area, the lessor undertaking number to grant any lease, permit or prospecting licence regarding the limestone to any other party therein without a companydition that numberlimestone should be used for the manufacture of cement in companysideration of a sum of Rs.
60 of 1950 arising out of the Order dated the 22nd day of November, 1949, of the Income tax Appellate Tribunal in I.T.A. Nos.
5,000 payable annually during the whole period of the lease.
Appeal from the Judgment and Order dated the 7th day of June, 1951, of the High Court of Judicature at Calcutta in Income tax Reference No.
5,000 and Rs.
The Income tax Officer, the Appellate Assistant Commissioner and the Appellate Tribunal rejected the companytention of the companypany and the following question, as ultimately reframed, was at the instance of the companypany referred by the Tribunal to the High Court for its decision Whether, in the circumstances of the case, the two sums of Rs.
Porus A. Mehta for the respondent.
35,000 payable annually but only for 5 years from the 15th November, 1940.
Under clause 5 a further protection was given in respect of the whole of the Khasi and Jaintia Hills District, a similar undertaking being given by the lessor in companysideration of a sum of Rs.
40,000 in accordance with these two companyenants and claimed to deduct the sums in the companyputation of its business profits under the provisions of section 10 2 xv of the Income tax Act in the assessments for the assessment years 1945 46 and 1946 47.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
The lease was for 20 years companymencing on the 1st November, 1938, and ending on the 31st October, 1958, with a clause for renewal for a further term of 20 years.
162 of 1952.
6,000 with the provision for payment of further royalties in certain events.
The Judgment of the Court was delivered by, BHAGWATI J. This appeal from the judgment And order of the High Court of Judicature at Calcutta with leave under section 66 A 2 of the Indian Income tax Act raises an interesting question as to the line of demarcation between capital expenditure and revenue expenditure.
On the 14th November, 1938, the appellant companypany acquired from the Government of Assam a lease of certain limestone quarries, known as the Komorrah quarries situated in the Khasi and Jaintia Hills District for the purpose of carrying on the manufacture of cement.
November, 11.
1026 and 1027 of 1948 49 C. Chatterjee for the appellant.
