COMMISSIONER OF INCOME-TAX, BOMBAY CITY Vs. CENTURY SPINNING WEAVING & MANUFACTURING COMPANY LIMITED

JUDGEMENT

(1.) This is a reference under Section 66 (1) of the 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 had been continuously in use since before the 25 of February, 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 the 25 day of February, 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 companys 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 Millowners Association, Bombay. They are its old trade marks, in the sense that the company had been continuously using them since before the 25 February, 1937, which date is important having regard to one of the material sections of the Trade Marks Act, V of 1940.

(3.) 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 registrations 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 1943-44, claimed allowance in respect of it in the computation of it business profits, under Section 10 (2) (xii) of the Indian Income-tax Act.