1965 (11) TMI 35 - SUPREME COURT

Whether, on the facts and in the circumstances of the case, the sum of ₹ 96,000 paid by the assessee during each of the relevant accounting years was rightly allowed as a revenue deduction in computing the business profits of the assessee-company?

Held that:- in the present case the royalty payment is not a direct payment for securing an enduring advantage ; it has relation to the raw material to be obtained, we must hold that the royalty payment, including the dead-rent, have relation only to the lime deposits to be got. If it has no direct relation to the acquisition of the asset, then the principle relied on by the learned Attorney-General does not afford him any assistance. We, therefore, hold that the yearly payment of ₹ 96,000 should be treated as revenue expenditure and the answer to the question referred to the High Court must be in favour of the assessee. Appeal allowed.