TMI Blog1965 (6) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance of ₹ 5,154 representing the payments made to Sridharan and Velayudhan to shut off the competition while buying timber which formed part of the assessee's business is justified in law? (2) Whether, on the facts and in the circumstances of the case, the addition of ₹ 30,000 to the income returned by the assessee in respect of bus transport business is lawful? Question No. 1: The claim for deduction in respect of ₹ 5,154 was based on the assertion that the assessee had paid ₹ 2,577 to one Velayudhan Pillai and an equal sum to one Sridharan Pillai, forest contractors, in order to persuade them not to compete at the auction of a coupe by the Forest Department and thus secure a portion of the stock- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consistent. The last of the three sentences which, perhaps, is the material one, reads as follows: The disallowance is sustained on the simple ground that they had not been proved as proper deductions. In view of this sentence, we propose to assume that the Tribunal has not differed from the conclusion of the Income-tax Officer and the Appellate Assistant Commissioner that the payments were as a matter of fact made, and that the only controversy is as to whether the expenditure should be considered as an item of capital or revenue expenditure. Almost all the case bearing on the frequent controversy between capital versus revenue have been cited before us. There is no doubt, however, that the outstanding legal touchstone to resolv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his trade not from a forest depot but from the forest itself by cutting the trees and removing them to his place of business from a small and specified area and that within the short space of twelve months. In the light of the principles laid down by the Privy Council in the case above-mentioned as well as in the other leading cases on the subject and in the circumstances of the case before us, like the nature of the assessee's trade, the volume of his business and the duration of the contract, we feel no hesitation in saying that what he acquired by the payments to Velayudhan Pillai and Sridharan Pillai was not an asset of an enduring character but a portion of his stock-in-trade for the year at a reasonable or advantageous price. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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