P.N. Shinghal, C.J.
1. The Income-Tax Appellate Tribunal (Delhi Bench 'A') (hereinafter referred to as the Tribunal) has drawn up the statement of the case and referred the following question of law to this Court under Section 256(1) of the Income tax Act, 1961, hereinafter referred to as 'the Act', for decision,-
Whether on the facts & in the circumstances of the, case the Tribunal was right in holding the payment of Rs. 3 lakhs to the Northern Railway was a revenue expenditure and was a deduction allowable under the Income-tax Act, 1961?-
The reference has arisen in these circumstances : The Bikaner Gypsum Ltd, hereinafter referred to as 'the assessee', carries on the business of mining minerals. Its predecessor in title, the Natural Science (India) Ltd, acquired a lease from the Maharaja of the erstwhile Bikaner State on September 29, 1948 ever an area of 427 square miles, at Jamsar. The lease agreement is on the record as Anexure B. The lease was for a period of 20 years and was renewable thereafter. It was assigned to the assessee on December 11, 1948, and the assessee entered into an agreement with the Sindri Fertilizer for the supply of gypsum of a minimum of 835 percent quality.
2. The assessee's mining area at Jamsar included inter alia, the Jamsar railway station, the railway track and the railway siding. The assessee was, according to the Tribunal, restricted from carrying on its mining operations within a distance of 100 years from those places. The railway extended its yard into the leased area and the assessee filed a suit in the Court of the District judge, Bikaner, for ejectment, but without success.
3. The assessee exhausted possibility of obtaining gypsum of the required degree of purity from the areas where it was entitled to carry on its mining operations without any restrictions, although gypsum deposits of a lower degree were available in those areas. According to the statement of the Tribunal, a large quantity of gypsum of 'a high degree of purity acceptable to Sindri Fertilizer lay under the surface of the land covered by the railway station, railway track and the railway yard'. The assessee appealed to the railway authorities to shift the railway station, railway track and the railway yard from their existing position so that it could, as stated by the Tribunal, 'raise gypsum of the required purity to fulfil its contract with the Sindri Fertilizer'. It was ultimately agreed between the assessee, the Sindri Fertilizer, the Government of India and the Railway Board that the railway station, the track and the yard would be shifted and the total expenditure of Rs. 12 lakhs thereon would be borne equally by all four of them The assessee paid Rs. 3 lakhs and the Railway Board released the land to it. The assessee started the mining operations on the released land in March 1965 and 'exhausted gypsum of the required purity there from by May 1967'. It raised 6,30390 tons of gypsum from that area as against the estimated stock of 10 lakh tons.
4. When the question of making an assessment of the income for the assessment year 1964-65 was taken up, the assessee claimed that the expenditure of 3 lakhs was for removing certain obstructions on its gypsum deposits. The Income-tax Officer held in his order Annexure A that the payment was for acquiring an additional capital asset, and that view was confirmed an appeal by the Appellate Assistant Commissioner's order Annexure D dated August 20, 1966. The assessee appealed to the Tribunal which held that it was not a capital payment but a 'revenue' expenditure, and was a permissible deduction. The alternative contention of the assessee that the payment was for obtaining stocks of gypsum to be supplied to the Sindri Fertilizer was also upheld.
5. The Commissioner of Income-tax made an application under Section 256(1) of the Act requiring the Tribunal to refer the aforesaid question of law to this Court, and this is how the Tribunal has drawn up the statement of the case and made the reference
6. The learned Counsel for the parties have referred at length to the terms and conditions of the lease agreement Annexure B to show whether the payment of Rs. 3 lakhs was by way of a revenue expenditure. It will however be sufficient for us to say that the duty of finding the facts was essentially on the Tribunal, and it has stated them as follows,-
(i) The '4.27 sq. miles of leased mining area at Jamsar included Jamsar railway station, railway track and railway siding'.
(ii) The aseessee was 'under the terms of the lease agreement restricted from carrying on its mining operations within a distance of 100 years' from the area mentioned in (i) above.
(iii) The aseessee had 'exhausted gypsum of the required decree of purity from the areas where it was entitled to operate without any restrictions.'
(iv) 'There were gypsum deposits of lower degree of purity in such areas which were however net acceptable to Sindri Fertilizer'.
(v) A 'large quantity of gypsum of high degree of purity acceptable to Sindri Fertilizer lay under the surface of the land, covered by the railway station, railway track and railway yard'.
(vi) The assessee 'appealed to the railway authorities to shift the railway station, track and yard from its existing position so that it could raise gypsum of the required purity to fulfil its contract with the Sindri Fertilizer'.
(vii) 'Ultimately it was decided between the Company, Sindri Fertilizer, Government of India and Railway Board that the railway station, track and yard should be shifted and the expenses to be equally borne by all four of them ...'.
(viii) 'Accordingly, the Railway Board shifted the railway station, track and yard and released the land to the Company' (Emphasis added).
(xi) The assessee 'started mining operations in the released land in March 1965 and exhausted gypsum of the required purity therefrom by May 1967' (Emphasis added).
(x) The assesses 'raised 6,30,390 tons gypsum from the said area against the estimated stock of 10 lakhs tons, during this period'.
We have to answer the question under reference on these basic facts.
7. It is well settled by the decision of their Lordship of the Supreme Court in R B. Seth Mool Chand Suganchand v. Commissioner of Income-tax, New Delhi : [1972]86ITR647(SC) that mining operations stand on a some-what different footing from others business, and a question like the one under reference has to be examined with due regard to that fact
8. The learned Counsel for the parties have cited a number of decisions, some of which deal with the facts applicable to a case like the present. The test are whether the expenditure was for the acquisition of a business or of rights essential to the earning on of a business City of London Contract Corporation, Limited, v. Styles (Surveyor of Taxes) 2 TC 239 whether the assessee was granted any interest in lard Mohan Lal Hargovind of Jabbulpore v. Commissioner of Income-tax, C.P, and Berar, Nagpur (1949) 17 ITR 473, whether the expenditure was incurred for initiation of the business. The Commissioner of Inland Revenue v. The Caven Central Co-operative Agricultural and Dairy Society, Ltd 12 TC 1, whether the capital was fixed or circulating John Smith and Son v. Moore (H.M. Inspector of Taxes 12 TC 266, whether a right was acquired to a source from which the raw material was to be extracted Pingle Industries Ltd. V. Commissioner of Income-tax, Hyderabad : [1960]40ITR67(SC) , whether any new asset has been created as a result of the expenditure Southern v. Porex Consolidated Ltd (1940) 4 ALL ER 412, whether the winning of the mineral depended on uncertain factors Commissioner of Income-tax, Madras v. Siddareddy Venkatasubba Reddy and Bros : [1949]17ITR15(Mad) , whether payment was to be made even if no mineral was extracted Pingle Industries Ltd. v. Commissioner of Income-tax, Hyderabad : [1960]40ITR67(SC) , whether the expenditure was going to be made once for all Vallambrosa Rubber Co. Ltd, v. Parmer (Surveyor of Taxes 5 TC 529, whether there was no limit to the quantity of the mineral to be extracted Pingle Industries Ltd. v. Commissioner of Income-tax, Hyderabad : [1960]40ITR67(SC) , was the assessee ensuring supplies of raw materials or purchasing them Aliansa Co. v. Bell (1904) 2 KB 666, and Mohanlal Hargovind of Jubbulpore v. Commissioner of Income-tax, C.P., and Berar, Nagpur (1949) 17 ITR 473, whether the mineral in situ was the assessee's stock-in-trade Stow Bardolph Gravel Co, Ltd v. Poole (H.M, Inspector of Taxes 35 TC 459, whether asset or advantage acquired by the assesses was for the enduring benefit of the trade Atherten (H.M. Inspector of Taxes) v. British Insulated and Helsby Cables Limited 10 TC 155, and whether the money had been laid out as a trader and was directly and intimately connected with his business and not by way of owing assets Travancore Titanium Piotluct Ltd v. Commissioner of Income-tax, Kerala : [1966]60ITR277(SC) etc.
9. It is, however, well settled by the decisions of their Lordships of the Supreme Court in Abdul Kayoom and Anr. v. Commissioner of Income-tax : [1962]44ITR689(SC) and M.A. Jabbar v. Commissioner of Income-tax, Andhra Pradesh : [1968]68ITR493(SC) that these and other tests .re not exhaustive or universal, and the answer to a question like the present depends on the facts of the case in which it has arisen. As has been laid down in Abdul Kayoom's case : [1962]44ITR689(SC) , what is decisive is the nature of the business in which the assesses is employed, the nature of the expenditure, the nature of the right which has been acquired, and the relation of these factors inter se.
10. In the present case, as has been stated by the Tribunal, the assessee 'carried on the business of mining minerals' under the aforesaid mining lease, and had entered into 'an agreement of five years with the Sindri Fertilizer for the supply of gypsum of minimum 835 percent quality' and for that purpose it had to 'search for, win, get, raise, convert and carry away' gypsum deposits of the Jamsar area as provided for in the lease agreement(Annexure B). It is no body's case that the mineral in question, namely, gypsum, had already been gotten, or was otherwise on the surface and had only to be shovelled and supplied to the Sindri Fertilizer. It was therefore necessary for the assessee to search for gypsum deposits of the required standard, win the gysum by carrying on mining operations and get it out for supply under the agreement.
11. As has been stated, the Tribunal has found it as a fact that in the course of mining operations, the assessee had exhausted gypsum of the required degree of purity from the area where it was entitled to operate without my restrictions. It has been stated by the Tribunal that gypsum deposits of a lower degree of purity were available in those areas, but they were 'not acceptable to Sindri Fertilizers'. The assessee had therefore to search for areas where gypsum of the required quality was available According to the Tribunal, the assessee found that such deposits 'lay under the surface of the land covered by the railway station, railway track and railway yards'. The Tribunal has, it will be recalled, further stated that the assessee was 'under the terms of the lease agreement restricted from carrying on its mining operations within a distance of 100 yards' from that area. It therefore appealed to the railway authorities to shift the railway station track and yard . so that it could raise gypsum of the required purity to fulfil its contract with the Sindri Fertilizer'. There were some negotiations in the matter and ultimately it was, according to the Tribunal, decided between assessee, the Sindri Fertilizer, the Government of India and the Railway Board that 'the railway station, track and yard should be shifted, and the expenses to be (sic) equally born by all four of them', & the assessee 'contributed Rs. 3 lakhs being its share of the total expenses of Rs. 12 lakhs incurred for shifting railway station etc.' This then was the nature of the expenditure in question. It was not on account of a payment for royalty or for collecting any gypsum lying on the surface by way of stock-in-trade, or for purchasing raw material, or by way of expenditure for the initiation of the assessee's business and it also was not an expenditure directly and intimately connected with the work of running the assessee's business.
12. But what was the nature of the right which was acquired by the assessee on payment of Rs. 3 lakhs? This, as has been stated, is the third important question to be answered.
13. The Tribunal has examined the question of the assessee's surface rights in the leased land and has recorded the following finding,-
As, however, surface rights were not given in respect of the area covered by the Railway property, the assessee Company could not break open the crust of the area covered by the said railway property and could not reach the gypsum deposits.
Moreover, a cross-reference to the statement of the case will show that the other findings of the Tribunal which bear on the question are these, -
(a) On payment of Rs. 3 lakhs the ''Railway Board shifted the railway station, track and yard and released the land to the Company',
(b) the assessee thereupon 'started mining operations in the released area in March 1965 and exhausted gypsum of the required purity therefrom by May 1967',
(c) the assessee 'raised 6,30,390 tons gypsum from the said area against the estimated stock of 10 lakh tons' during a period of about 2 years and 2 months.
It is quite clear from these facts that what the assesaee acquired on payment of Rs. 3 lakha was a new asset, or, at any rate, an 'Improvement' of a fixed capital asset which, according to the decision of Southern v. Borax Consolidated Ltd. (1940) 4 All ER 412, was an expenditure which was attributable to capital. There is no justification for the argument of Mr. Mehta for the assssee that we should not reach this conclusion merely because a formal document was not drawn up by the railway authorities, even after the payment of Rs. 3 lakhs, to give effect to the agreement which had been arrived at by the parties concerned.
14. Mr. Mehta has argued further that the assessee did not acquire, any right whatsoever and that it paid Rs. 3 lakhs for the removal of an impediment because the restriction to carry on mining operations with in a radius of a hundred yards from the railway property was not 'an absolute one' and could be got over by obtaining the necessary permission. It has also been urged that the assessee merely acquired the means for the use and exploitation of its capital asset and what was acquired could not therefore be said to be a capital asset upto itself.
15. It will be recalled that the Tribunal has found that the assessee did not possess the surface rights over the so called, railway area. And if it acquired that new right, even though for the purpose of mining the gypsum which was lying underneath that area, there is no reason why the new acquisition should not be regarded as the assessee's new assed the more so when it was so badly needed for carrying on its adventure that with our it the mining operations had come to a stop as gypsum deposit of the required degree of purity had been exhausted from the areas where the assessees was entitled to operate and the Sindri Fertilizer was not prepared to accept deposits of a lower degree of purity which were still available there. We are fortified in this view by the decision in Knight D.B. Inspector of Taxes v. Gander Grave Estates 35 IC 447. There the respondents purchased some other land for the purpose of obtaining access to the coal which lay under the surface of the land for which they held a mining lease for open-cast working It was held that it was acquisition of land for the adventure and so, on ordinary principles, the transaction must be regards as capital expenditure. Reference may also be made to H.J. Rorke Ltd. v. Commissioners of Inland Revenue 39 TC 104 where it was held that payment by open cast coal mining company for right of entry open the land of others was a capital expenditure even though the whole operation was to last only for a few months. It was held that as the Company were not buying circulating capital i.e coal, but were acquiring rights in land which enabled it to obtain circulating capital, the payment was of a capital nature.
16. It may also be mentioned that the Tribunal, has stated in its appellate order (Annexure F) that what was granted to the assessee under Clause I of Part II of the lease agreement Annexure B was, 'liberty and power...to enter upon the leased lands and to search for, win, work, get, raised, convert and carry away gypsum' and to carry on the mining operation mentioned in Clause 2 for that purpose. There is therefore no justification for Mr. Mehta's contention that the assessee acquired a property right in the gypsum deposits in situ, and the reference to the acquisition of mineral rights in the Tribunal's appellate order cannot be construed as a finding that the Tribunal had reached the finding that the assessee had become the owner of the gypsum in situ in the railway land. It may be that as has been stated in Halsbun's Laws of England, volume 26, third edition' paragraph 899, a mining lease may be granted of the surface of the land and the minerals below, but that can not justify Mr. Mehta's further argument ''trait the assessee must for that reason, be deemed to have become the owner of the other deposits in situ, or to have a proprietary right therein irrespective of the other terms of the lease. It follow, therefore, that the test laid down in Stow Bardolph Graval Co. Ltd. v. Poole (Inspector of Taxes) : [1955]27ITR146(Cal) that if what is purchased is not readily identifiable stock in-trade, but the means of getting the mineral, the expenditure would be on capital account, would be applicable to the present case as well.
17. It will be recalled that one of the tests in such case was laid down by Viscount Cave L C in Atherton's case 10 TC 155, as follows,-
But when an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade. I think that there is very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital.
In the case the sum which was sought to be deducted was contributed irrevocably as the nucleus of a Pension Fund established by a trust deed for the benefit of the Company's clerical and technical salaried staff. It was held that the payment was in the nature of capital expenditure and the deduction we s not admissible. 1 he test was followed in Knight (H.M Inspector of Taxes) v. Galder Grave Estates 35 IC 447 and H.J. Roorke, Ltd. v. Commissioners of Inland Revenue 39 TC 104. It has been approved by their Lordships of the Supreme Court in Pingle Industries Ltd. v. Commissioner of Income-tax Hyderabad (1960) 40 ITR 677 and Abdul Kayoom and Anr. v. Commissioner of Income tax : [1962]44ITR689(SC) . It bas been noticed by their Lordships that the words 'enduring benefit of a trade'' do not mean 'everlasting' but 'in the way capital endures'' The view taken in the case of the Pingle Industries Ltd. : [1960]40ITR67(SC) has been followed in R.B. Seth Moolchand Susanchand v. Commissioner of Income-tax, New Delhi (192) 86 ITR 647 so that Viscount Cave's test whether the asset or advantage is for the enduring benefit of the trade, has held the field in the absence of special circumstances leading to an opposite conclusion. As has been stated, the words 'enduring benefit' do not denote any specific length of time and, if we may say so with respect, are meant to convey the meaning that the benefit is not merely momentary, or ephemeral, or transitory, or transient, 'o when in the present case the assesses was able to secure the release of the land in question and was able to carry on its mining operations in the released land from March 1965 to May, 1967, we have no doubt that what was acquired on payment of Rs. 3 lakhs was an asset or advantage for the codunng benefit of the assessee's business and was attributable to capital. It may be mentioned that no special circumstance leading to an opposite conclusion has been brought to our notice.
18. We have made a reference to the decision of their Lordships of the Supreme Court in R B Seth Moolchand Sagaocband v. Commissioner of Incme-tax, New Delhi : [1972]86ITR647(SC) and we would like to refer to it in some details here as it was a direct bearing on the controversy before us. That was, however, not available to the Tribunal as it was rendered after the Tribunal had deeded the appeal. It was also a case whete the assessee firm was carrying a mining business. It tendered for mica mining, in accordance with the terms and conditions prescribed in the rules, for certain areas, for Rs. 1, 57, 150 of which a sum of 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. The firm claimed Rs. 7,857 being one twentieth of the tender money as revenue expenditure for the year. Their Lordships of the Supreme Court referred to the view of Lord Cave in Atherton (H.M. Inspector of Taxes) v. British Insulated and Helsby Cables, Limited 10 TC 155 and their own decision in Abdul Kayowm's case : [1962]44ITR689(SC) and observed as follows,-
If we confine our attention to the mining leases, what appears to as 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 is, the mineral, would be a revenue expenditure laid our for the acquisition of stock in-trade. An expenditure incurred for acquiring a right to take away sand from the surface of river made has been treated as it the land was stock-in-trade M.A Gabbar v. Commissioner of Income-tax in the same way as tendu leaves have been treated by the Privy Council in Sohanlal Hatgovind's case.
Their Lordships also referred to their decision in Pingle Industries case : [1960]40ITR67(SC) and, while observing that the principles which were applied to that case were equally applicable to the case before them, they laid down the law in the following terms.-
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 right over land for wining the mineral. In other words, where the mineral is part of the land and some mining opperations 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.
Their Lordships held that as minerals bad to be won and extracted from the earth, the payment to acquire the right over or in the land and to win the mineral could not be equated to a payment made for the purpose of acquiring stock-in-trade, and was on capital account. They held that the fact that the period of licence was one year, did not make it a revenue payment. The facts of the instant case are quite similar and we have no doubt that we have to give a similar decision. There also, the payment of Rs. 3 lakhs was made to acquire the light over or in the so called railway land to win gypsum Moreover that right was irrespective of the quantity of gupsum obtained by the assessee and, as the assessee had still to carry on the mining operations by way of winning, extracting and bringing gypsum which was embodied in the land to the surface, what the assesee acquired was a assset or advantage for the enduring of its business. It will be recalled that the Tribunal has found it as a fact that the mining operations were carried on in the released area for some 2 years and 2 month and the assaaee was able to win 6,30 390 tons of gypsum against the estimated stock of 10 lakhs tons It is no boay's case, and has in fact not been contended by Mr. Mehta, that what was acquired was a mere stock-in-trade for he has appreciated that it would be impossible for him to place his case that high.
19. Mr. Mehta tried to argue that the assessee became the owner of the gypsum deposits in situ but as has been shown, that contention is not tenable on the terms and conditions of the lease. The ancillary argument that the payment of Rs. 3 lakhs was made to remove the restriction or obstruction which was placed in the way of the assessee, is equally untenable for that very reason. So also, there is no justification for the argument that the assessee acquired nothing new on payment of Rs. 3 lakhs As has been shown, it undoubtedly acquired a new asset or advantage for the enduring benefit of its business as it acquired a source from which gypsum bad to be extracted Pingle Industries Ltd. v. Commissioner of Income tax, Hyderabad : [1960]40ITR67(SC) Moreover the operation of the assessee depended on uncertain factors for where as the estimated stock of gypsum in situ was 10 lakhs tons the assessee found that it was only 6,30,390 tons. It will be recalled that, even so, it had to paid Rs. 3, lakhs that the payment was irrespective of the quality of gypsum which was actually extracted.
20. Paced with the odds against him, Mr. Mehta put forth the argument that the assesee's right to win gypsum from the restricted area was in a state of suspended animation and that it come back to lite as soon as the restriction was removed by the railway authorities, the payment of Rs. 3 lakhs was wholly releted to production and was analogous to operating costs and was cot by way of acquiring an enduring advantage. Reliance in this connection has been placed on the decisions in Southern v. Borax Consolidated Ltd. (1940) 4 All ER 412 Commissioner of Taxes v. Aodhanga Consolidated Copper Mines, Ltd. 5 TC 529 Lakshmiji Sugar Mills Co. P Ltd. v. Commissioner of Income-tax, New Delhi (1972) 82 ITR 3776 Commissioner of Income-tax, vest Bengal v. Hindustan Motors Ltd. : [1968]68ITR301(Cal) , Royal Calcutta Truf Club v. Commissioner of Income-tax, West Bengal, Calcutta : [1958]33ITR616(Cal) , Commissioner of Income-tax, Bombay North v. Chenduhl Keshavial and Co. Petled : [1960]38ITR601(SC) , Commissioner of Income-tax, Bihar and Orissa V. Kirkend Coal Co. (1970) 77 ITR 830 Cottn Lime Syndicate v. Commissioner of Income-tax Rajasthan, and Delhi : [1966]59ITR718(SC) , Kalvanji Mavji and Co. v. Commissioner of Income-tax, West Beugai II : [1973]87ITR228(Cal) , Commissioner of Income-tax, Bombay City v. Associated Cement Companies Ltd. (1974) 86 ITR 650 and Central Corporation Ltd. v. Commissioner of Income-tax, Madras AIR 1936 Mad 26. We nave gone through all these cases and, as we shall show, they have no bearing on the controversy before us.
21. In Southern case 5 TC 155, it was found that the capital asset of the Company 'remained absolutely unaltered' and that the legal expenses which were incurred by it did not create any new asset at all, but were expenses which were incurred in the ordinary course of maintaining the assets of the company and the fact that it was maintaining the title, and not the value, of the Company's business did not make It any different.
22. In Commissioner of Taxes v. Anchanga Consolidated Copper Mines Ltd (19), it was held that by paying compensation the companies acquired the right to have P. Ltd out of production tar the year, so that the expenditure was wholly related to the output of the Company's mine and was analogous us to an operating cost. So also in Lakshmiji Sugar Mills Co. P. Ltd. v. Commissioner of Income tax, New Delhi (1927) 82 ITR 376 it was held that as the Company carried on the business of manufacture and tale of sugar, the contribution made for the construction and development of roads, which had an clement of statutory compulsion and were not altogether newly made, was incurred for the purpose of facilitating the running of its vehicles and was for running the business or working it with a view to producing profits without the company gaining any advantage of an enduring benefit. In Commissioner of Income tax, West Bergai v. Hindusthan Motor Ltd. : [1970]77ITR530(SC) the Company made a contribution for the improvement of the approach road. That was why it was held that the expenditure was not so much to bring about any asset or advantage of enduring benefit to itself as to run the business efficiently and conveniently.
23. The facts of Royal Calcutta Turf Club v. Commissioner of Income-tax West Bengal, Calcutta : [1958]33ITR616(Cal) were quite different for there the expenditure had been incurred to avert a threat or to rid the club of an embarrassment & it was found that the expenditure had been incurred on the Club's school for jockeys for maintaining the conditions which would preserve for it, its opportunities for making profits in the business and as such it was an expenditure for the put pose of carrying on the assessee's business Sa also in Commissioner of Income-tax, Bombay North v. Chandulal Raghavlal and Co. Petled : [1970]77ITR530(SC) , it was found that the pare of the admission which was given up by the assessee was expended for reason of commercial expeliency and was a lowable business expenditure. In Commissioner of Income-tax, Bihar and Orissa v. Kirkend Coal Co. : [1966]59ITR718(SC) , it was found as a fact that stowing was a necessary operation in the process of extraction of coal and that was why it was held to be an allowed deduction.
24. We have already made a reference to Gotan Lime Syndicate v. Commissioner of Income-tax, Rajasthan, and Delhi : [1973]87ITR228(Cal) . It was held on the facts of the case that royal payment, including deid rent, had relation only to the like deposits to be got and that was why it wag treated as a revenue expenditure Kalyanji Mavji and Co v. Commissioner of Income-tax West Bengal II (1974) 86 ITR 650 was a Case where the mine was not worked for a number of years because of military occupation, The firm in that case claimed the expenses incurred by it during the period of military occupation on account of minimum royalty, surface rent and salary for watch and ward staff It was held that the firm must be consid red to have been carrying on its business in coal as owner of coal mint and there was no question of requiring a new or a fresh asset Commissioner of Income-lax, Bombay City I, v. Associated Cement Co. Ltd. AIR 1936 Mad. 267 was also a different case where it was found that the payment bad been made to remove the possibility of a recurring disadvantage and was for the convenienr and econmical running of toe business As regards General Corporation Ltd. v. Commissioner of Income-tax. Madras (1971) 82 ITR 872, it will be sufficient to say that the Com any there spent some money in trying to resume its closed business. The busing was never resumed and it was therefore held that the expenditure which was incurred with the intention of resuming the business was an allowable deduction.
25. It will thus appear that the cases which have been cited by Mr. Mehta are of no avail to the assessee and it must be held that the expenditure under challenge was on account of capital and was not debitable.
26. Mr. Mehta has tried to support the Tribunal's view and has argued that it is essentially correct because it has been based on what he has called findings of facts of the Tribunal. It has been contended 'hat those findings are not open to challenge in these proceedings because it vas for the Tribunal to fired the facts and it is for this Court to lay down the law applicable to them Reference in this connection has been made to Agha Abdul Jabbar Khan v. Commissioner of Income tax, M.P. (1971) 82 ITR 872 , Commissioner of Income tax, Andhara Pradesh v. Kotnka Venkataswamy and Sons : [1971]79ITR499(SC) , Income tax Appallate Tribunal Bombay v. Managing Trustee, Shree Radha Madho Trust, Saugor C.P. AIR 1946 Nag. 397 and Aluminium Corporation of India Ltd. v. Commissioner of Income-tax, West Bengal : [1972]86ITR11(SC) .
27. It is true that this Court has no jurisdiction to raise new question of law, but it is equally well settled by the derision in Commissioner of Income tax, Bombay South, Bombay v. Ogale Glass Works Ltd. ( : [1954]25ITR529(SC) that if the language of the question clearly indicates that the question of law has to be determined 'on the facts of the case, as in this case. It would involve an undue cutting dean of the scope of the question if all the other facts appearing one the record and referred to in the Tribunal's appellate order and the statement of the case were to be left out merely b cause the Tribunal has not founded its decission on them although they were the subject matter of consideration before it. The decision in Ogale Glass Works case : [1954]25ITR529(SC) has been approved in Commissioner of Income-tax, Bombay v. Scindia Steam Navigation Co. Ltd. : [1961]42ITR589(SC) and it has been held as follows at page 812:
All that Section 66(1) requires is that the question of law which is referred to the court for decision and which the court is to decide must be the question which was in issue before the Tribunal. Where the question itself was under issue, there is no further limitation imposed by the section that the reference should be limited to those aspects of the question which had been argued before the Tribunal. It will be an over refinement of the position to hold that each aspect of a question is itself n distinct question for the purpose of Section 66(1) of the Act.
The view in Scindia Steam Navigation Co. Ltd. : [1961]42ITR589(SC) has been referred to and approved in Bhanji Bhagwandas v. Commissioner of Income-tax, Madras (1968) 677 ITR 18.
28. It is therefore permissible for this Court to examine the so-called four findings of fact referred to by Mr. Mehta the more so as they are really the ground' for the Tribunal's decision that the expenditure of Rs. 3 lakhs was OD revenue account. Moreover, as we shall show, those grounds are inadequate. or inconsistent, or incorrect.
29. The first ground is that the Tribunal has taken the view that the 'assessee acquired a right to the minerals i.e. the gypsum lying underneath the entire 4 27 square mites of land specified in the lease-deed including the land covered by the railway property. Mr. Mehta haft urged that we should accept this as a finding that the assessee was the owner of the gypsum in situ lying unbedded in the earth within a distance of 100 yards from the railway. This is boweer an impossible contention because the Tribunal has itself stated in an earlier pait of its appellate order Annexure P, that what the assessee got was the right to search for win, work, pet, raise, convert and carry away the gypsum, so that there could bf no justification for holding that the assessee was the owner of the mineral JI situ It may also be mentioned, that in so far as the railway was concerned, there was an express restriction in the lease deed that no mining operations or working shall be carried on or permitted to be carried on by the assessee on or under the lease at or to any point within a distance of 100 yards from any railway'. It appears that the Tribunal lost sight of these basic faces, and that has led to as erroneous decision of the appeal before it.
30. The second ground referred to by Mr. Mehta is that the Tribunal has held that the assessee has not only been given a licence to remove as much gypsum as it possibly could from the leased area 'but has also been given the surface right over the entire area for enabling it to do so with certain restrictions in respect of certain areas.' It has further been held that ''having regard to the nature of the operation there would have been no point in granting mineral rights under a certain area without granting the surface right above the said area ' But this ground is also untenable for at least two reasons.
Firstly, as has been shown, it is not correct to say that, in so far as gypsum in situ was concerned, the assessee had any right other than the right to carry on mining operations to win it in the area where this was permissible. Secondly, the Tribunal lost sight of the fact that it bad itself stated a little earlier, in its appellate order Annexure, F that 'surface rights were not given in respect of the area covered by the railway property' and that 'the assessee did not have any means of access of approach to the said deposits as it did not possess the surface rights over that area ' There is therefore an apparent inconsistency in the reasoning of the Tribunal and it is no wonder that it baa arrived at an incorrect conclusion.
31. The third ground which has been pointed out is that the Tribunal has recorded the finding that Rs. 3 lakhs were not spent for acquiring surface rights which the assessee already acquired under the lease-deedit will be sufficient for us to say that this reasoning suffers from the same infirmity which we have pointed out in regard to the second point.
32. Lastly, it has been pointed out that the Tribunal has dealt with the nature of the benefit or advantage received by the assessee on payment of Rs. 3 lakhs and held as follows:
We have pointed out above that surface right was a consumable right which did not endure beyond providing access 7 to 8 feet column of gypsum deposit directly underneath it Moreover, even the mineral deposits underneath the entire area of 40 acres released by the Railways did not last for more than two years and did not yield more than 6,30,330 tons of gypsum.
We have not been able to appreciate what exactly is meant by using the expression 'consumable right' for, in the nature of things, nothing is eternal and a mining operation has a tendency to end some day. As has been pointed out in B.D. Seth Moolchand Suganchand v. Commissioner of Income-tax, New Delhi : [1972]86ITR647(SC) , it is not meant by an enduring advantage that it should be an everlasting advantage, and that it is enough if it endures in the way capital endures. It is also futile to contend that a right which lasted for two years or so is nit of an enduring nature It may be stated that it has been held in R.J. Rorke, Ltd. v. Commissioner of Inland Revenue 39 TC 104 and R.B. Seth Moolchand Suganchand v. Commissioner of Income tax New Delhi : [1972]86ITR647(SC) that an advantage or benefit which lasts for a much shorter period may be for the enduring benefit or advantage of the business of the assessee. The Tribunal also lost sight of the fact that the benefit or advantage was actually so substantial that the assessee WAS not only able to carry on its mining operations from March 1965 to May 1967, but raised 6,30,300 tons of gypsum of the required degree of purity which also was acceptable to the Sindri Fertilizer an which was not available any where else and would not have been available but for the payment of Rs. 3 lakhs.
33. For the reasons mentioned above, we have no doubt that the Tribunal committed a serious error in deciding the question of law under reference and we have no hesitation in answering it in the negative. Further action may be taken by the Registrar as required by Section 260 of the Act. Costs here will be payable by the assessee, Counsel's fee Rs. 300/.