TMI Blog1949 (7) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... e of capital expenditure or personal expenses of the assessee) laid out or expended wholly or exclusively for the purpose of such business. Certain expenditure claimed by the assessee to be a permissible deduction under this paragraph and admitted to have been made wholly and exclusively for the purpose of the business of the appellants was disallowed by the Income-tax Officer. His order was confirmed successively by the Appellate Assistant Commissioner of Income-tax, Nagpur, and by the Income-tax Appellate Tribunal, Bombay. Application was made to that Tribunal for a reference to the High Court of Judicature, Nagpur, of the question whether the appellants were entitled to the deduction in question and the High Court (Grille, C.J., and S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e forest produce is defined as all the said produce which may now exist or may come into existence in the contract area which the forest contractor may remove from the said area...during the period from 5th day of September, 1939, to the 30th day of June, 1941. Schedule 1A provides that the contractor shall commence his work before the..............day of.........193, and shall, to the satisfaction of the office empowered to execute the contract on behalf of Government, make continuous and adequate progress throughout the term of the contract. In this provision the dates by an obvious oversight are left in blank but the date of commencement could not be later than 31st December, 1939. In the second of the two agreements which, with cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of no more significance than would be, e.g., a right to spray a fruit tree given to the person who has bought the crop of apples. The contracts are short-term contracts. The picking of the leaves under them has to start at once or practically at once and to proceed continuously. It is true that the rights under the contracts are exclusive but in such a case as this that is a matter which appears to their Lordships to be of no significance. The question, therefore, resolves itself into the short one--is expenditure of this character made in acquiring one of the raw materials of the appellants' manufacture capital expenditure within the meaning of this Act? There is no definition of that expression which must in their Lordships' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d containing a substance called caliche from which nitrates and iodine could be obtained by a process of manufacture. It was analogous to the purchase or leasing of a mine and was obviously capital expenditure. The claim was one equivalent to a claim to deduct the expenditure made in acquiring the land for it was a claim to deduct the amount carried year by year to a sinking fund set up to meet the exhaustion of the caliche. This case appears to their Lordships to bear no resemblance to the facts of the present case which resembles much more closely the case described and distinguished by Channell, J., at page 673 of the report in Alianza Co. v. Bell [1904] 2 K.B. 666 affirmed on appeal. [1905] 1 K.B. 184 and [1906] A.C. 18, of the cost of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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