R. B. Seth Moolchand Suganchand Vs.
The Commissioner of Income-Tax, Delhi [1972] INSC 230 (19 September 1972)
REDDY, P. JAGANMOHAN REDDY, P. JAGANMOHAN
KHANNA, HANS RAJ
CITATION: 1973 AIR 15 1973 SCR (2) 360 1973
SCC (3) 257
CITATOR INFO:
D 1991 SC 227 (9,10)
ACT:
Income tax Act (11 of 1922) s. 10 (2)
(xv)-Amount paid for lease of mica mine already worked and fee for prospecting
licence-Capital or Revenue expenditure-Tests.
HEADNOTE:
The assessee, a firm carrying on mining
business, took on lease for 20 years certain areas which had been worked
previously by. others, and in which mica pillars had been exposed by those
earlier mining operations. Mica scrap was also lying on the surface. The
assessee paid a sum of money, part of which was towards the mica scrap lying on
the surface. The assessee also paid at Re. 1 /per acre per year as fee for
prospecting licence., The assessee claimed the 1/20th part of the money paid
for the lease as well as the fee paid for the prospecting licence as revenue
expenditure for purposes of income tax. The Tribunal allowed the money paid for
the mica scrap lying on the surface as revenue expenditure, but disallowed the
other claims. The High Court also, on reference, held against the assessee
(appellant).
Dismissing the appeal to this Court,
HELD : The expenditure incurred for the
lease, as well as the fee paid for the prospecting licence, were not allowable
as revenue expenditure. [362G-H; 371C] (1)The test for ascertaining whether the
amount spent for the lease is of a capital nature, is whether it was spent for
obtaining a right of an ,enduring character, which, in the case of mining lease
is to acquire rights over land for winning the mineral. In other words, where
the mineral is part of the land and some mining operations have to be performed
to extract it from the earth, the amount paid to acquire a right over, or in
the land, to win that mineral, is of an enduring character, and hence, a
capital expenditure. But where the mineral has already been gotten and is on the
surface, then the expenditure incurred for obtaining the right to acquire the
raw material, that is, the mineral would be a revenue expenditure laid out for
the acquisition of a stock-in-trade. [365A-B; 368G-H] In the present case, the
findings of the Tribunal are clear and consistent with those given by the
Income-tax Officer and the Appellate Assistant Commissioner, in that, all of
them distinguished between the raw-materials which had already been extracted
and brought to the surface, and those that are still to be extracted. The mica
pillars which had been exposed by the earlier mining operations, had enhanced
the value of the right which was leased to the appellant, but none the less,
the appellant still had to carry out some mining operations to extract the
mineral from the pillars which were embedded in the land. The lease was for a
long period and it conferred a right to excavate the mica.
The amount paid was therefore for acquiring a
right of an enduring nature to extract and remove the mica, to bring it to the
surface, grade it, and pay royalty to the Government in accordance with the
quality of each grade of mica extracted. [368C-D, H; 369A-C; 370B-D] Pingle
Industries Ltd. v. Commissioner of Income-tax Hyderabad, 40 I.T.R. 67,
followed.
361 Artherten v. British Insulated and Helsby
Cables Ltd. [1926] A.C. 205, 213, Kauri Timber Co. Ltd. v. Commissioner of
Taxes, [1913] A.C. 771, Golden Horse Shoe (New) Ltd. v.Thurgood (H.M. Inspector
of Taxes), 18T.C. 280, Abdul ayoom v. Commissioner of Income Tax, 64 ITR 689 at
703, Mohanlal Hargovind v. C.I.T., 17 I.T.R. 473 and M.A. Jabbar v.Commissioner
of income Tax, 68 I.T.R. 493, referred to.
(2)The term prospecting licence' shows that
the mine has not yet started working as a mine. The finding by the authorities
and the Tribunal that the fee paid for the prospecting licence was a payment
for initiating the mining operations was a finding of a fact. It was, in fact,
a fee paid irrespective of the quantity of minerals obtained showing that the
object of the payment was to initiate the business. The period for which the
licence was obtained, namely one year, does not also make it a revenue payment.
The fee paid to obtain the licence to carry
out, investigate, search and find the mineral with the object of conducting the
business of extracting ore from the earth, is a fee paid for indicating the
business and therefore, is of a capital nature and could not be equated to a
payment for the purposes of stock-in-trade. [370D-H; 371A-B]
CIVIL APPELLATE JURISDICTION: C. A. No. 2020
of 1972.
Appeal by certificate from the judgment and
order dated March 28, 1968 of the Rajasthan High Court at Jodhpur in
Income-tax' Reference No. 1 1 of 1963.
N. D. Karkhanis and A. G. Ratnaparkhi, for
the appellant.
S. C. Manchanda, P. L. Juneja, S. P. Nayar
and R. N. Sachthey, for the respondent.
The Judgment of the Court was delivered by
JAGANMOHAN REDDY, J. This appeal is by special leave against the judgment of
the High Court of Rajasthan in I an income-tax reference under s., 66 (1 ) by
which it answered the two questions referred to it in the negative. Before this
appeal was filed, Appeal No. 1238/1969 had been filed on a certificate but that
is dismissed without costs because this Court had in several cases' held that
in Income-tax references if the High Court does not give any reasons while
granting the certificate, the certificate can be revoked.
The assessee, a firm carrying on mining
business at Udaipur with a branch at Mandal, had pursuant to an invitation to
tender for mica mining in accordance with the terms and conditions prescribed
in the Mineral Concession Rules, tendered for certain areas for Rs. 1,57,150/of
which Rs.
3,360/was payable towards the mica scrap
lying on the surface. The lease was for 20 years and the areas which were
offered had been worked by other Private companies for 15 years. This offer of
the appellant was accepted and the lease was granted to it. In the relevant
assessment year 1952-53 for which the previous year for the head office ended
on October 30, 1951 and for the branch ended 362 on March 30, 1952, the
appellant claimed Rs. 7,857/being the 1/20th of the tender money as revenue
expenditure incurred during that year. The claim of the assessee was rejected
by the Income-tax Officer on the ground that the money was paid for the value
of the land which it had acquired because the mine granted to the assessee had
already been worked by the private companies. In an appeal against this order,
the Appellate Assistant Commissioner confirmed the disallowance of the
expenditure as in his view, it was a capital nature expended for the
acquisition of a, capital asset. Against this order, an appeal was filed to the
Appellate Tribunal. The Tribunal however allowed Rs. 3,360/paid for mica scrap
lying on the surface as a revenue expenditure incurred in the acquisition of
stock-in-trade, but disallowed the claim for the balance of Rs. 1,53,800/which
was paid under the tender as a capital expenditure.
The assessee had also claimed Rs. 3,200 as
the fee paid by it a the rate of Re. 1/per acre per year for prospecting
licence. The income-tax Officer disallowed this amount under s. 10(2) (xv) of
the Indian Income-tax Act, 1922 (hereinafter called the 'Act') on the ground
that the licence was obtained by the assessee only that year, that the fee was
paid in addition to the royalty payable on the value of the emeralds excavated
and sold and that it was an initial expenditure for procuring a right to
respect mines.
The Appellate Assistant Commissioner in an
appeal by the assessee negatived the claim on the ground that under that
licence the assessee had a right to win and commercially exploit the minerals
which the assessee actually carried out. The Tribunal while dismissing the
appeal filed against the order of the Appellate Assistant Commissioner observed
that the prospecting licence fee cannot be equated to a payment made for the
purchase of stock-in-trade, that it was not based, on any quantity of minerals,
that the minerals had to be won and extracted from the earth and the term
"prospecting licence" shows that the mine had not yet started working
as a mine and that the payment was to initiate the business.-It also held that
the period of one,-year for which the licence was obtained cannot justify the
fee paid as a revenue expenditure. The assessee thereafter filed' application
under s. 66(1) of the Act and as in its opinion a question of law did arise,
the, Tribunal referred the following two questions to the High Court for its
opinion :
1. Whether on the facts and in the
circumstances of the case, the prospecting licence fee of Rs. 3,200/is
allowable as revenue expenditure?
2. Whether on the facts and in the
circumstances of the caste the appropriate Part of Rs. 1,53,800/was allowable
as revenue expenditure ? 363 Taking the second question first, it is contended
before us by the learned advocate for the appellant that Rs.
1,53,800/paid for pillars of mica standing in
the land leased out after the other private companies had worked it was a
revenue expenditure because the tender which was given and accepted was on the
basis of the calculations in the Indian Mining Hand Book for a specific
quantity of mica in the mines which was the assessee's stock-intrade. The
revenue however submits that the amount of the lease was a capital outlay
incurred for the initiation of the business, and that the pillars of mica
cannot be stock-in-trade unless the mica was excavated, and brought to the
surface. A large number of cases decided in this country and in England,
dealing with different topics were referred and arguments addressed before us
dealing with many analogies of one kind or other, tendu leaves mangoes, apples,
sand, brickearth, lime and other commodities all with a view to persuade us to
ascertain what is the true test to be applied to the particular facts of this
case' We do not however propose to refer to cases dealing with variety of
topics except perhaps to determine the nature of the expenditure incurred in
this case by the assessee.
This Court in Pingle Industries Ltd. v.
Commissioner of Income-tax, Hyderabad(1) had occasion to examine exhaustively
the relevant Indian and English cases for determining what is a capital
expenditure and what is a revenue expenditure. That was also a case of mining
where the assessee obtained leases for excavating Shahabad stones for a period
of 12 years for which an annual payment of Rs.
28,000 was agreed upon. The majority of
Judges, Kapur, J.
and Hidayatullah, J. (as he then was) (S. K.
Das, J.
dissenting) held that the assessee acquired
by his long term lease the right to win stones, that the stones in situ were
not its stock-in-trade in a business sense but a capital asset from which after
extraction it converted the stones into its stock-in-trade. It was also held
that the payment was neither rent nor royalty but a lump payment in instalments
for acquiring a capital asset of enduring benefit to its trade; the amounts
being out goings on capital account, were therefore not allowable deductions.
The proposition as qualified by Lord Cave in
Atherton v. British insulated and Helsby Cables. Ltd.(2) that in the absence of
any special circumstances leading to the 'opposite conclusion, when an
expenditure is made, not only once and for all, but with a view to bringing it
into existence an asset or advantage for the enduring benefit of a trade, has
been applied, explained and varied from time to time as the circumstances of
the particular case required.
The application of these principles to the
various cases and the conclusions reached by courts in those cases often (1) 40
I.T.R. 67. (2) [1926] A. C. 205,213.
6-L498Sup CI/73 364 lead to irreconciliable
results. It is because the topic itself is a troublesome one and is not
rendered any the less difficult by resorting to principles. "It is not always
easy" observed Romer, L.J. in (;olden Horse Shoe (New) Ltd.
v. Thurgood (H. M. Inspector of Taxes(1)
"to determine whether a particular asset belongs to one category or the
other" nor does it depend in any way "on what may be the nature of
the asset in fact or in law." In our own Court this difficulty has been
put very tersely,. if we may say so with respect, by Hidayatullah, J. (as lie
then was) in Abdul Kayoom v. Commissioner of Income-tax(2) when he said:
"...... none of the tests is either
exhaustive or universal. Each case depends on its own facts, and a close
similarity between one case and another is not enough, because even A single
significant detail may alter the entire aspect. In deciding such cases, one
should avoid the temptation to decide cases (as said by Cordozo. The nature of
the Judicial Process, p. 20) by matching the colour of one case against the
colour of another. To decide, therefore, on which side of the line a case
falls, its broad resemblance to another case is not at all decisive. What is
decisive is the nature of the business, the nature of the expenditure, the
nature of the right acquired, and their relation inter se, and this is the only
key to resolve the issue in the light of the general principles, which are
followed in such cases." The determining factor will depend largely on the
nature of the tract-, in which the asset is employed. The several cases which
do not deal with the mining leases but are concerned with different assets are
of little help in the same way as in Mohanlal Hargovind v. C.I.T.(3), cases
relating to the purchase or leasing of mining quarries, deposits of brick earth
were considered not to be of assistance by the Privy Council in case of a
contract for collecting and removing tendu leaves. The principles enunciated
for determining the nature of the expenditure have been sought to be applied to
different situations arising on the facts of each case, but the difficulty in
matching them with the seeming irreconciliabiliiy are perhaps explicable only
on the ground that the determination in any particular case is dependent on the
character of the lease or agreement, the nature of the asset, the purpose for
which the expenditure was incurred and such other factors as in the facts and
circumstances of that case would indicate.
If we confine our attention to the mining
leases, what appears to us (1) 18 T.C. 280.
(3) 17 I.T.R. 473.
(2) 64 I.T.R. 689 at 703.
36 5 to be an empirical test is that where
minerals have to be won, extracted and brought to surface by mining operations,
the expenditure incurred for acquiring such a right would be of a capital
nature. But where the mineral has already been gotten and is on the surface,
then the expenditure incurred for obtaining the right to acquire the raw
material-that isthe mineral, would be a revenue expenditure laid out for the
acquisition of stock-in,trade. An expenditure incurred for acquiring a right to
take away sand from the surface of river beds has been treated as if the sand
was stock-intrade,-M.A. Jabbar v. Commissioner of Income-tax(1) in the same way
as tendu leaves have been treated by the Privy Council in Mohanlal Hargovind's
case. In the former case, Bhargava, J. indicated a number of factors which led
to the conclusion that the expenditure incurred by the assessee in obtaining
the lease was revenue expenditure for the purpose of obtaining stock-in-trade
and not capital expenditure which were : (1) that the lease was for a very
short period of 11 months only; (2) that the sole right which was acquired by the
assessee under the lease deed was to take away the sand lying on the surface of
the leased land where no question of raising, digging or excavating for the
sand before obtaining it was involved. In other words, no operation had to be
performed on the land itself and "is not a case where the gravel is in any
true sense" as appointed out in Golden Horse Shoe (New) Ltd.'s case
"was won from the soil .... it is merely shovelled up where it lies."
In the latter case the Privy Council said that the leases for the right to
collect and remove tendu leaves under which a certain sum was payable by
instalments as a consideration for the grant of that was a revenue expenditure
it pointed 'Out that the contracts were short term contacts, that the picking
of the leaves had to start at once or practically at once and to proceed
continuously and that under the contract it is tendu leaves and nothing but
tendu leaves that are acquired. At page 478 while comparing that case with the
case of Kauri Timber Co. Ltd. I.,.
Commissioner of Taxes(2 )where the company's
business consisted in cutting and disposing of timber and it had in some cases
acquired timber-bearing lands and in other cases it purchased the standing
timber, the lease itself being for 99 years, the Privy Council observed
"In the present case the trees were not acquired nor were the leaves
acquired until the appellants had reduced them into their own posse ssion and
ownership by picking them.
The two cases can, in their Lordshops'
opinion, in no sense be regarded as comparable. If the tendu leaves had. been
stored in a (1) 68 I.T.R. 493 (2) [1913] A.C. 771.
366 merchant's godown and the appellants had
bought the right to go and fetch them and so reduce them into their possession
and ownership it could scarcely have been suggested that the purchase price was
capital expenditure. Their Lordships see no ground in principal or reason for
differentiating the present case from that supposed." The analogy referred
to in the above passage is sought to be applied to the facts of this case but
in our view there is hardly any justification for such a conclusion having
regard to the findings of the Tribunal and the income-tax authorities.
The learned advocate for the assessee
contends that the Income-tax Officer, the Appellant Assistant Commissioner and
the Tribunal, each of them had given different findings for coming ,to the
conclusion that the expenditure was of a capital nature while the High Court
gave yet another reason to answer the questions against the assessee. Inasmuch
as the correctness or otherwise of the order depends greatly upon what has been
found as facts. of this case, it would be useful to examine the respective
orders.
The Income-tax Officer, as we have earlier
stated held that the money was paid for the value of the land which the
assessee had acquired because the mine granted to the assessee had already been
worked by other private companies.
This finding, according to the learned
advocate, is contrary to the facts set out in the statement of the case by the Tribunal
in which a reference was made to paragraph 5 of the invitation to tender. It
reads "As the area has been worked by a private company during the past
fifteen years, all the known mines and quarries and prospecting pits have
acquired a value which can be determined on the principles of 'mine valuation'.
Intending applicants are therefore requested
to visit the area before April 15, 1950 and assign their own value and offer
it.
According to the assessee, as already pointed
out, it had offered Rs. 1,57,150/ after the mica had been valued on the
principles of mine valuation which represented a payment of stock-in-trade. The
Appellate Assistant Commissioner has rejected the claim of the assessee with
these observations:"On merits the appellant's claim cannot be sustained
because the circumstances detailed above, clearly indicate that the payment of
tender money was for the acquisition of capital asset and not, as sought to-be
made out, for the stock of ores. The stock was not 367 here on the surface but
it was still embedded with the only difference that its availability could be
more definitely gauged than in the case of an un worked area. It would not make
any material difference whether the miner acquires a lease on ordinary terms
for an area which does not give a clear indication of the possible existence of
ore or he acquires on more expensive terms an area which is in such a condition
that it gives definite indication about the possibility of existence of ore
therein and also broadly the extent thereof.
Acquisition in either case would be of a
capital asset and payment therefore, small or large, a capital
expenditure." Earlier the Appellate Assistant Commissioner had stated that
when the lease was allotted to the appellant by the Mining Department "it
was made clear that any mica scrap left by the predecessor exploiters M/s.
Duduwala & Co., on the surface would be removed either by these exploiters
within three months or if not so removed it would stand forfeited to the
Rajasthan Government in any case it was not to come to the appellants." In
the light of what has been stated, it is clear that the Appellate Assistant
Commissioner made a distinction between mica that has been ,excavated and
brought it; the surface and the mica which was still embedded and had to be
excavated even though it was more easily avail-able because of the labour
already expanded in the working out of the mine by the other private companies.
The conclusions of the Tribunal are set out
in the following passage.”In our opinion, the amount paid cannot be equated to
payment for raw materials. The raw materials have to be won and extracted
before they could be said to be stock-in-trade. The sum represents the price
that was paid by the assessee for obtaining the right to, extract and win
emerald and mica in an area which had already been worked and developed by a
predecessor for 15 years. If the assessee had to start running a mine, it had
to incur similar expenditure. In this case, the amount had been incurred and
was paid for by the assessee. Thus this amount in our opinion represents
capital expenditure incurred for the purpose of obtaining certain benefits of a
capital nature. This is not in the nature of any royalty or rent paid by the
assessee to the authorities. In this connection, reference was made on behalf
of the assessee to the provisions of Rule 51 of the Mineral Concession Roles
which prohibits premium being paid for obtaining such a licence. This rule
occurs in Chapter 5 which applies to grant 368 of mineral concessions by
Private persons and we do not consider that the rule is relevant for
considering the question in issue before us where the grant is by the State. We
do not also think that this is in the nature of any premium. This is merely for
the purpose of getting benefits of certain structures and other works carried
out in the area which had already been worked as a mine previously.
This cannot be equated to a premium that is
contemplated by rule 5 1. We therefore agree with the authorities below in
holding that the assessee has not made out the claim for deduction of the
amount." The finding of the Tribunal given in the above excerpt is clear
and consistent with that given by the Income-tax Officer and the Appellate
Assistant Commissioner in that all of them distinguished between raw materials
which had already been extracted and brought to the surface and those that have
still to be extracted. Apart from the objection that no question was formulated
by which the findings of the Tribunal were challenged on any admissible
grounds, there are, in our view, no contradictions in the fin-ding of the
Tribunal as submitted by the learned advocate for the assessee because what the
Tribunal was dealing with in the latter part of the passage cited above, were
the contentions urged on behalf of the assessee, firstly, that the amount was a
royalty or rent 'paid to the authorities and secondly, what was paid was in the
nature of premium. While rejecting these contentions the Tribunal gave its
reasons but that is not to say that the conclusion that the amount was a
capital expenditure was not based on the finding that mica had to be extracted
and brought to the surface before it could be considered as the assessee's
stock-in-trade.
In our view the principles which have been
applied in the Pingle Industries' case are equally applicable to the facts and
circumstances of this case. The test for ascertaining whether the amount spent
is of a capital nature is, whether it was spent for obtaining a right of an
enduring character which in the case of mining leases is to acquire rights over
land for winning the mineral. In other words, where the mineral is part of the
land and some mining operations have to be performed to extract it from the
earth, the amount paid to acquire a right over or in the land to win that
mineral is of an enduring character and hence a capital expenditure. In this
case the mica pillars which have been exposed by the mining operation of other
private companies had no doubt enhanced the value of the right which was leased
369 to the appellant but nonetheless.the appellant still had to carry out some
mining operations to extract the mineral from the pillars which was embedded in
the land. If the private companies before the mica was exposed had taken the
lease, they would have paid a much lesser amount which nonetheless would have
been a capital expenditure.. It is the labour and expense which the private
companies expanded that has enured for the benefit of the Government and
enhanced the capital value of the lease. This is not a case as is contended, of
mica having been given so as to form part of the stock-in-trade of the assessee
as in the case of Golden Horse Shoe (New) Ltd. v. Thurgood (H. M. Inspector of
Taxes) (1) In that case the company had acquired rights in certain dumps of
'tailings' or residuals that remained after the extraction of gold from ore
taken from certain gold mines. It was contended on behalf of the revenue that
the company's rights in tailings and dumps were part of the undertaking which
the company was formed to acquire and any sum paid therefore was capital
expenditure, and that the company's rights in the dump was the purchase of a
wasting asset. This contention was negatived and it was held that the purchase
price of, the tailings was an admissible deduction in computing the company's
profits for income-tax purposes . Lord Hanworth, M.R. at page 298 observed
"After careful consideration of, the present case, in the course of which
my mind has fluctuated on either side, I think it is to be decided upon its own
facts-that none of the tests suggested affords a strict rule of guidance. It
seems, then, that the Company bought these dumps-which were no longer in a
natural but in an artificial condition; which were in such a state that they
would not have passed under a lease-of "beds opened, or unopened,
minerals", see Boileau v. Heat Ch. D. 301)-for the purpose of treating
them as the stock-in trade, lying stored and ready to their hand, at a fair price
of pound 122,750, and their intention was to use them up and make what they
could of them by and after treatment.
They had not to win them from the soil; they
had been gotten already. If the metaphor of working a mine be applied, it might
be said that the purchase of the dumps was a capital outlay. If the metaphor of
making gas or coke from coal, or of a miller making flour from wheat, be
applied, it may be said that it was an outlay to be placed in the profit and
loss account. But metaphors do not provide exact definitions and are often
misleading. It is safer (1) 18 T.C. 280.
370 to give an interpretation to the facts of
this case as found in the case stated and upon the law relevant to them. "
This passage at once indicates the difficulties which he in common with other
Judges have felt When called :upon determine the nature of the expenditure.
The lease in this case was for a long period
it conferred a right to excavate the mica because on the findings of the
Tribunal mica had to be extracted from the mine though, the ,earlier working
out of the those mines by other companies had made it much easier to perform
the final operations and because of it a higher amount had to be paid.
Nonetheless the amount paid was for acquiring a right of enduring nature to
extract and remove the mica to bring it to the surface, grade it and pay
royalty to the Government in accordance with the quality of Leach grade of mica
extracted. We accordingly hold that the ,expenditure incurred is a capital
expenditure and that the second question has been rightly answered.
On the first question whether the prospecting
licence fee of Rs. 3,200/is allowable as revenue expenditure, the contention on
behalf of the assessee is that it is a licence fee, not a lease amount nor does
it create an interest in the land. The Income-tax Officer, the Appellate
Assistant Commissioner and the Tribunal have all held that the fee paid for
prospecting licence was not ,of a revenue nature. It was submitted before the
Tribunal that under a prospecing licence issued under Chapter 3 of the Mineral Concession
Rules, 1943 the licensee had a right to win and carry away the minerals for
commercial purposes, and for that reason the amount should be treated as in the
nature `of a purchase price of a stock-in-trade. In support of this contention
the provisions of T. 23 were referred to but the Tribunal rejected that
contention because in its view the amount was paid, as and by way of
prospecting fees which was for initiation of a business as in the case of other
minerals and that the character of the licence did not change merely because
the licensee had certain rights over the minerals obtained under the
prospecting licence nor was it based on any quantity' of minerals. The minerals
had to be won and extracted from the earth and the term 'prospecting licence'
shows that the mine has not yet started working as a mine. It was a fee paid
irrespective of the quantity of minerals obtained which demonstrated clearly
that the object of the payment was to initiate the business. That apart, the
period for which the licence was obtained viz., one year, does not also make it
a revenue payment and consequently it held that the authorities Tightly
disallowed the amount. The finding by the Income tax ;authorities as well as
the Tribunal that it was a payment for 371 initiating the mining operations was
a finding of fact. In oar view also the, fee was paid to obtain a licence to
carryout, investigate, search and find the mineral with the object of
conducting the business of extracting ore from the earth. It is therefore clear
that the fee was paid for initiating the business and is of a capital nature.
By no stretch of argument can the fee paid for a prospecting licence be equated
to a payment made for the purposes of stock-in-trade. We think that the
Income-tax authorities, the Tribunal and the High Court are right in coming to
that conclusion. Our answer to the first question is, therefore also in the
negative. The two questions having been answered against the assessee, the
appeal is dismissed with costs.
V.P.S. Appeal dismissed.
Back
