1971 PLP 533 (PTD)

VEERASWAMI, J.‑In respect of the assessment year 1959‑60, the assessee claimed a deduction of Rs. 2,615 as legal expenses. This amount included a sum of Rs. 1,250 paid to an advocate in connection with the opening of three new bus routes. The Income‑tax Officer disallowed the claim in toto. The appellate authority declined to interfere but found, that the correct figure was a sum of Rs. 1,

250. The Tribunal also concurred with the revenue. In the circumstances, the reference comes before us under section 66(1y of the Indian Income‑tax Act, 1922, and the question is: "Whether, on the facts and circumstances of the case, the sum of Rs. 1,250 ii not an admissible deduction in the computation of the assessee's business income under sec tion 10(2)(xv) of the Indian Income‑tax Act for the assessment year 1959‑60 ?" It is stated that the sum of Rs. 1,250 was fees paid to a lawyer, who appeared in proceedings under the Motor Vehicles Act, to obtain the three new route permits. The assessee is a fleet owner, as we are told, and carries on transport business. It is argued that the expenditure incurred by payment of the lawyer's fee in getting the three route permits is expenditure of a revenue character and is entitled to deduction under section 10(1)(xv). We are unable to accept the contention. A reference to the provisions of the Motor Vehicles Act would make it clear that each route permit is a separate entity, which is granted after elaborate proceedings. Transport business, after all, consists of running of buses and no bus can be run except on permit. When a new permit is obtained, in our opinion it cannot be said that the expenses incurred therefore are expenses laid out for the purpose of a business carried on by the assessee. The business carried on by the assessee before acquisition of the new permits is the business in running other transport buses for which permits had already been granted. In respect of the new permit there can be no business before a permit has been obtained. It is settled at Fast so far as this Court is concerned, that such a permit is property and the expenses incurred in acquisition of such property, which is the basis for starting the business of running the bus to which the permit relates, are, therefore, of a capital character. Expenses incurred in registering a trade mark are quite a different matter. Before registration of a trade mark, business is carried on over a length of tine and has acquired a reputation. Normally there is a business carried on when registration of a trade mark is made. There can be a trade mark even without registration. Registration of a trade mark is made in order that it may be protected by the relative statutory provisions. It is clear, therefore, that expenses incurred in registering a trade mark can well be said to be expenses laid out wholly for the purpose of the business which the assessee has been carrying on. Nor do we think that India Cements Ltd. v. Commissioner of Income‑tax ((1966) 60 I T R 52 (S C)) is of assistance in deciding the question. In the course of running the business, expenditure was incurred for obtaining loans which were used in the business and such expenditure was held to be on the revenue side. That is not the case here. Our attention has been invited to the following observations in Commissioner of Income‑tax v. Malayalam Plantations Ltd. ((1964) 53 I T R 140 (S C)). "It may also comprehend payment of statutory dues and taxes imposed as a pre‑condition to commence or for carrying on of a business ; it may comprehend many other acts incidental to the carrying on of a business". In our opinion, the case of a route permit has to be viewed in the light of the provisions of the Motor Vehicles Act. Section 10(2)(xv) speaks of expenditure laid out for the purpose of a business which the assessee is carrying on. We are unable to see how, even before a permit is obtained, the assessee can be taken to carry on business of running a bus which would be covered by a permit to be obtained. We are not inclined to think that the expenditure in obtaining a new permit can be regarded as expenditure laid out for the purpose of the business of running buses covered by other permits. On that view, we answer the question against the assessee with costs ; counsel's fee Rs. 250.