9911796707
TMI Blog1951 (10) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... ending with the calendar years 1941, 1942 and 1943, the respondent claimed the expenditure incurred by it in registering for the first time its trade marks which were not in use prior to the 25th February, 1937, as revenue expenditure and an allowable deduction out of its income for the said periods, under Section 10(2)(xv) of the Indian Income-tax Act. Following the decision of the Bombay High Court in Commissioner of Income-tax, Bombay v. The Century, Spinning, Weaving and Manufacturing Co. Ltd. the Tribunal allowed the claim of the assessee. At the desire of the appellant, the Tribunal submitted the following question for the opinion of the High Court : --- " Whether, on the facts of the case, the expenditure incurred by the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich it was paid was attained. The House of Lords held that this payment was in the nature of capital expenditure and was therefore not an admissible deduction. Although in the opinions expressed by the different members of the House of Lords the line of approach is not completely the same, the principle stated by Lord Cave in his speech has been accepted as a safe test to distinguish capital expenditure from revenue expenditure. It was recognised that a sum of money expended, not of necessity and with a view to a direct and immediate benefit to the trade, but voluntarily and on the grounds of commercial expediency, and in order indirectly to facilitate the carrying on of business, may yet be expended wholly and exclusively for the purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods and some person having the right to use the mark, whether with or without any indication of the identity of that person ". Section 14 permits the proprietor of a trade mark to have the trade mark registered. The Attorney-General, on behalf of the appellant, relied on Sections 20, 21, 28 and 29 in support of his contention. He argued that before the Trade Marks Act, although the proprietor of a trade mark could maintain an action for infringement of his trade mark and the cause of action in such a case was quite different from the cause of action in an action for passing off goods, by the Trade Marks Act the right of the owner of the trade mark is increased by Section 21, and it is made assignable independently of the goodwill und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus merely saves him the trouble of leading evidence, in the event of a suit, in a court of law, to prove his title to the trade mark. It has been said that registration is in the nature of collateral security furnishing the trader with a cheaper and more direct remedy against infringers. Cancel the registration and he has still his right enforceable at common law to restrain the piracy of his trade mark. In our opinion, this is neither such an asset nor an advantage so as to make payment for its registration a capital expenditure. In this connection it may be useful to notice that expenditure incurred by a company in defending title to property is not considered expense of a capital nature. In Southern (H. M. Inspector of Taxes) v. Borax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Inspector of Taxes) v. Grafton Hotel Ltd. In that case, tenants of licensing premises by agreement with the landlord paid by instalments the monopoly value fixed by the licensing justices when granting the licence under Section 14 of the Licensing (Consolidation) Act, 1910. These were sought to be deducted as revenue expenditure but were disallowed by the Court. Lord Green, M. R., first considered that the payment fell into the same class as the payment of a premium on the grant of a lease or the expenditure on improvements to the property which justices may require to be made as a condition of granting a licence. Having reached that conclusion he rejected the argument that the payment not being made in one lump sum but by instalments made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention that because the premium was paid in more instalments than one it lost its character of a capital expenditure. In our opinion, this is an entirely different thing from stating that the fact of the advantage being for a limited time altered the character of the payment in any way. As observed by Viscount Cave, L. C., the question is always one of fact depending on the circumstances of each case individually.
In our opinion, the decision of the High Court reported in Commissioner of Income-tax, Bombay v. The Century Spinning, Weaving and Manufacturing Co., Ltd. is correct and in the present case also the contention of the appellant must fail. The appeal therefore fails and is dismissed with costs.
Appeal dismissed.
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