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TMI Blog1974 (7) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... es called Centulia seams. In the year in question, namely, assessment year 1962-63, corresponding to the accounting year 1961-62, fire broke out in the adjoining seam, and the assessee was required by the Coal Board in its own interest and for the protection of its seams to dig a trench so that the fire may not extend to the seams in question. In digging this trench, which was 500 yards in length and in breadth 40 feet at its bottom and 80 feet at its surface, the total expenditure incurred by the assessee was about Rs. 27,000. Out of this amount, the Coal Board sanctioned an amount of Rs. 11,398, and to that extent the assessee was reimbursed, and the balance of the expenditure incurred had to be borne by the assessee. This balance amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or I must state at the outset that in the case of Kirkend Coal Co. the finding of the Tribunal on the question involved was the nature of the expenditure incurred by the assessee in that case over an operation called stowing and the Appellate Tribunal in that case has found as a fact that "stowing is an operation carried out in the process of extraction of coal and unless it is carried out extraction of coal is not possible...... " And one of the reasons why the Supreme Court upheld the view of the High Court as also that of the Appellate Tribunal in that case was this finding of fact recorded by the Tribunal. That case, therefore, is no direct authority for the point which has arisen in the present case. The question, therefore, has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the House of Lords has since received approval and has been relied upon by the Supreme Court in the case of Sree Meenakshi Mills Ltd. v. Commissioner of Income-tax . In this case expenditure on civil litigation for protecting the business was held to be admissible by the Supreme Court as revenue expenditure. Similarly, in the case of Commissioner of Income-tax v. Malayalam Plantations Ltd. stress was laid by the Supreme Court on the scope of the phrase "for the purpose of the business", and it was emphasised that the expression "for the purpose of the business" is wider in scope than the expression "for the purpose of earning profits". Its range is wide, it may take in not only the day to day running of a business but also the rationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, in order to ensure the running of business or trade of the assessee, namely, extraction of coal from the seams in question, it was necessary to protect the assets from devastation on account of such fire and, therefore, the digging of the trench by way of a protective measure can in no way be said to be a part of any capital outlay, even though the benefit so accruing may be of some enduring nature. The learned standing counsel for the department placed reliance upon two decisions of the Supreme Court, viz., Assam Bengal Cement Co. Ltd. v. Commissioner of Income-tax and K. T. M. T. M. Abdul Kayoom v. Commissioner of Income-tax and a decision of the Madras High Court in M. Subbiah Nadar v. Commissioner of Income-tax. In the case of Assa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd object of the expenditure would determine the character of the expenditure whether it is a capital expenditure or a revenue expenditure. " It will thus be seen that even in the case relied upon by the learned standing counsel the Supreme Court has laid emphasis on the aim and object of the expenditure for the purpose of determining its character, and keeping this test in view it was held in that case as also in the case of Abdul Kayoom that the items of expenditure in question were not revenue expenditure. As a matter of fact in Abdul Kayoom's case the assessee had sought to incur expenditure for the purpose of obtaining monopoly rights in fishery, and it was on the basis of that fact that the Supreme Court held that it was for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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