ASSOCIATED MINING INDUSTRIES LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee is a limited company and holds two leases of two mica mines. It appears that originally the leases were obtained by some third party, who may be or may have been connected with the assessee, but at some subsequent date, the leases were acquired by the company itself. THE first lease was granted on the 30th May, 1930, and the second some fourteen years later, on the 22nd Nov., 1944.

(2.) IT appears that the assessee carries on a business of purchase and sale of mica. In the course of its assessment for the asst. yr. 1946-47, it claimed a deduction of Rs. 2,300 which it had paid as minimum royalty during the relevant accounting year, which was the calendar year 1945. This minimum royalty appears to have been paid under one or both of the two mining leases and the case of the assessee was that it was entitled to a deduction of the amount under s. 10 (2)(xv) of the IT Act on the basis that it was expenditure laid out or expended wholly and exclusively for the purpose of its business.

(3.) BEFORE us it was contended on behalf of the assessee that the Tribunal had erred in holding that during the relative accounting year no business activity in connection with mining mica from the two mines concerned had taken place. According to Mr. Mitra, once a lease of a mica mine had been obtained and some step had been taken with a view to extraction of the mineral, a business had been set up and once a business was set up, the assessee was entitled to claim a deduction of the expenses incurred as revenue expenses. In my view, on the facts of this case, the contention of Mr. Mitra is not tenable.