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1965 (12) TMI 44 - SC - Income TaxWhether, on the facts and in the circumstances of the case, and on the correct interpretation of the three enclosures to the letter of the assessee dated the 8th day of July, 1954, to the Income-tax Officer concerned, the sum of ₹ 83,157 was allowable as an expenditure of a revenue nature ? Held that:- It is in the light of persistent efforts made by the company to secure renewal of the agreements for what the High Court called a " sufficiently large period " that the nature of the payment has to be determined. It was only with a view to persuade the State authorities to " grant a new lease for a period of four or five years " that an offer to pay those amounts in addition to the stipulated royalty was made. There was no legal obligation to pay those amounts under the terms of the original agreements, and the company offered " as a special case to pay " those additional amounts " on the understanding that the Government will give approval " for renewal of the agreement. The amounts agreed to be paid did not form part of the price of the company's stock-in-trade, right to collect which was conferred by the agreement dated June 13, 1952. There is no doubt that payment of premium in consideration of the owner of property agreeing to grant a right to take and remove the stock-in-trade of the taxpayer is in the nature of capital expenditure. We, therefore, agree with the High Court on the alternative ground which appealed to them. Appeal dismissed.
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