TMI Blog1978 (6) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee is a private limited company carrying on business of arranging exhibition of advertisement and film shorts in the licensed public cinema theatres in the four southern States of Madras, Andhra, Kerala and Mysore. One M/s. Saraswathi Publicities, Madras, was also carrying on the business of exhibition of film shorts on behalf of M/s. Hindustan Lever Ltd. and Lintas Ltd. for the said four southern States. The assessee felt that it would be commercially profitable if it could also carry on the business of exhibition of film shorts on behalf of M/s. Hindustan Lever Ltd. and Lintas Ltd. in the said four southern States. With this object in view it entered into an agreement with M/s. Saraswathi Publicities on April 1, 1966, under whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of the assessee as a whole and, therefore, the expenditure has to be treated as capital in nature. The Tribunal held that the expenditure of Rs. 1,50,000 was not related to the carrying on of the business of exhibiting film shorts but has resulted in the acquisition of an asset or a right of a permanent character for a period of 9 years without any competition from M/s. Saraswathi Publicities and that as the expenditure had been incurred for the purpose of securing an enduring advantage to the business as a whole, it cannot be regarded as a revenue expenditure. Aggrieved against the order of the Tribunal the assessee has sought this reference. Before us the learned counsel for the assessee submitted that the sum of Rs. 1,50,000 has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,50,000. We cannot, therefore, agree with the learned counsel for the assessee that the sum of Rs. 1,50,000 was expended for acquiring the stock-in-trade of the business of the assessee. On the facts, we take the view that the assessee has taken over the business of exhibition of film shorts of Hindustan Lever Ltd. and Lintas Ltd. in the four southern States for a period of 9 years for a consideration of Rs. 1,50,000. It cannot be disputed that the business which the assessee had taken over from M/s. Saraswathi Publicities was intended to generate income for a period of 9 years and the agreement under which the business was taken over for a period of 9 years also provides that M/s. Saraswathi Publicities cannot carry on the same business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach of two rival forest contractors in order to persuade them not to compete in an auction of a coupe held by the forest department. The question arose as to the character of the said expenditure. The court held that the expenditure had been incurred to secure a portion of the stock-in-trade of the assessee's timber business at an advantageous price and, therefore, the expenditure was in the nature of business expenditure and allowable as such. We do not see how that decision will help the assessee in this case. There the amount has been spent for acquiring stock-in-trade at an advantageous price by avoiding a competition in an auction to be held by the forest department. In this case, we have already seen that there is no question of any s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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