Expenditure incurred with a view to bringing into existence an asset or an advantage for the enduring benefit of a business is capital expenditure.

DIPAK KUMAR SEN, J.

( 1 ) IN the assessment year 1975-76, the accounting year ending on December 31, 1974, Mather and Platt (India) Ltd. , the assessee, a company incorporated in the United Kingdom, obtained lease of a premises in New Delhi and another lease of premises at Calcutta known as "nilhat House" respectively for periods of 15 and 20 years. The assessee acquired the said leases for its offices at Calcutta and New Delhi.

( 2 ) IN the said assessment year, the assessee paid a fee of Rs. 42 to its lawyers, viz. , Sandersons and Morgans, Calcutta, in connection with the lease agreement for its office at Nilhat House, and Rs. 380 to Orr Dignam and Co. , New Delhi, for consultation regarding the lease of the said office at Delhi.

( 3 ) ON account of fees for registration of the lease agreement in respect of the premises, Nilhat House, and miscellaneous expenses connected therewith, the assessee incurred an expenditure of Rs. 2,160. The assessee further paid Rs. 12,500 to Cox and Cooks for securing the lease of Nilhat House.

( 4 ) IN its assessment to income-tax for the said assessment year, the assessee claimed deduction of all the aforesaid expenditure aggregating to Rs. 15,082 as a business expenditure.

( 5 ) THE assessment was made by the Inspecting Assistant Commissioner. The Inspecting Assistant Commissioner ascertained, inter alia, that the said Rs. 12,500 had been paid to Cox and Cooks for securing the lease of Nilhat House. He found further that the lease of Nilhat House was for a period of 20 years on terms that the rent payable would be subject to an enhancement to the extent of any increase in the occupier's share of the municipal tax, such rent in any event was liable to be increased after 10 years and that the lease of the premises at Delhi was for a period of 15 years. The Inspecting Assistant Commissioner rejected the contention of the assessee that securing of the two leases could not be considered to be an acquisition of capital assets. He held that the two leases resulted in an enduring benefit to the assessee. The said Rs. 15,082 was found to be expenses incurred by the assessee for the purpose of retaining such enduring benefit and, therefore, deduction of the sum as claimed by the assessee was disallowed as being capital expenditure.

( 6 ) BEING aggrieved, the assessee preferred an appeal from the said order of the Inspecting Assistant Commissioner to the Commissioner (Appeals ). The Commissioner (Appeals) found that the said expenditure of the said amount of Rs. 15,082 had been incurred in connection with the lease agreement for new offices opened by the assessee. He noted that the Inspecting Assistant Commissioner had found that such expenditure had given an enduring benefit to the assessee. He agreed with the view taken by the Inspecting Assistant Commissioner and rejected the appeal of the assessee on this point.

( 7 ) BEING aggrieved, the assessee preferred a further appeal by way of a cross-objection before the Tribunal. Before the Tribunal, a decision of the Supreme Court in India Cements Ltd. v. CIT [1966] 60 ITR 52 was cited on behalf of the assessee in support of its contentions. The Tribunal found that the facts in India Cements Ltd. 's case [1966] 60 ITR 52 were different from the facts to the case before it and that the said decision had no application in the case of the assessee. The Tribunal held that the case of the assessee was covered by a decision of this court in Gobind Sugar Mills Ltd. v. CIT [1979] 117 ITR 747 Applying the said decision, the Tribunal dismissed the cross-objection of the assessee.

( 8 ) ON an application of the assessee under Section 256 (1) of the Income-tax Act, 1961 ("the Act"), the Tribunal has referred the following question as a question of law arising out of its order for the opinion of this court;"whether the Tribunal was right in holding that legal expenses and other expenses incurred for obtaining leases of the office premises at Calcutta and Delhi

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