TMI Blog1928 (2) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ears also a rival contractor who is referred to as Mr. X who was obviously regarded as likely to be a very dangerous competitor for the contract; and in order to induce him not to compete the assessees paid him down a sum of ₹ 12,000. That they say they are entitled to recover as being expenditure not in the nature of capital expenditure incurred solely for the purpose of earning such profits or gains. The result was that as Mr. X did not compete, they had the whole field to themselves, they got the whole contract and were able by screwing up the figures in former years to make more profits than they would have done in those former years. As a matter of fact the probability is that the extra profits they got just about squared with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um of money to the outgoing company to obtain the benefit of those contracts and claimed it as a deduction. Lord Justice Bowen in the course of the argument said this: You do not use it (that is, the money which had bought the contractual rights) 'for the 'purpose of' your concern (which means 'for the purpose of carrying on your concern') but you use it to acquire the concern. 3. Similarly Lord Esher at page 244; Here is a clear statement that the difference between money expended in the year in order to earn income which was to be received in the year, and the income so received, was 128,000. That is the net profit within the year, that is the sum upon which Income Tax is to be paid; and it is as plain as pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contracts, Countess of Warwick Steamship Co. v. Ogg (1924) 8 Tax Cases 652. It is the judgment of a single judge but it is a judgment of Rowlatt, J., a very great authority in Income Tax cases in which he has specialised for so many years. I will not quote his language but the short point was this. The Steamship Company in question had arranged for the purchase of a steamship on the very common system whereby the ship-builders are paid a lump sum in part payment as soon as the keel is laid in the yard and the rest of the price is paid in instalments as the fabric is gradually built up. After about 30,000 had been paid to the ship-builders which was a very small portion of all that would ultimately have to be paid, there was a slump in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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