CENTURY SPINNING AND MANUFACTURING COMPANY LIMITED Vs. STATE

JUDGEMENT

(1.) THIS is a reference under Section 66 (1) of the Indian Income-tax Act, and the problem which we have to consider arises for the assessment year 1943-44 in respect of the account year of the assessee. company, which is the calendar year 1942. The questions referred to us concern an expenditure of Rs. 16,707 in fees consequential upon the assessee company, who carry on the business of textile mills, making an application for registration of their trade marks which bad been continuously in use since before February 25, 1937. The questions submitted to us by the Tribunal are these: (1) Whether in the circumstances of the case the expense of Rs. 16,707 incurred by the assessee company in the material year of account in respect of application fees for the initial registration of its "old" trade marks, i. e. , trade marks which had been continuously in use since before February 25, 1937, was rightly held to be expenditure attributable to revenue ? (2) If it was revenue expenditure, whether it was incurred wholly and exclusively for the purposes of the assessee company's business ?

(2.) IN this case we are glad to note that there is an agreed statement of facts from which it appears that : The assessee company carries on a business of manufacture and sale of textile goods which are branded or stamped with its distinctive trade marks. The company had registered these trade marks with the Mill owners' Association, Bombay. They are its 'old' trade marks, in the sense that the company had been continuously using them since before February 25, 1087, which date is important having regard to one of the material sections of the Trade Marks Act, V of 1940. And then a little further on: IN the account year 1942 which is material to the assessments in question, the company made one or more applications for the first registration of their trade marks and incurred an expense of Rs. 16,707 on account of the prescribed application fees. It debited the amount to its revenue account and, in its assessment for 1934-44, claimed allowance in respect of it in the computation of its business profits, under Section 10 (2) (xii) of the INdian INcome-tax Act.

(3.) SECTION 29 provides: Notwithstanding anything in any other law to the contrary, a registered trade mark shall, subject to the provisions of this Chapter, be assignable and transmissible whether in connection with the goodwill of a business or not, and in respect either of all of the goods in respect of which it is registered or of some only of those goods.