GOVINDAN NAIR J. - This Income-tax Referred Case raises the same question relating to the assessment years 1957-58, 1958-59 and 1959-60. As directed by this court for the first of these years the question :
'Whether on the facts and in the circumstances of the case, the expenses totalling Rs. 4,493-11-9 incurred in connection with the kuries are admissible deductions under the Income-tax Act ?'
has been referred to us. And for the subsequent years, the Tribunal acting on an application under section 66(1) of the Indian Income-tax Act has formulated the following question : 'Whether, on the facts and in the circumstances of the case, the expenses of Rs. 2,875.75 and Rs. 3,337.49 incurred in connection with the kuries are admissible deductions under the provisions of the Income-tax Act ?' for our answer.
The assessee is a banking company. The memorandum and articles of the assessee permitted the carrying on by the company of kuri business. It is seen that they have been carrying on this business in all the three years. In all probability, they have been doing so in previous years as well.
The nature of the expenses that have gone to make up the respective figures for the three years relating to which exclusion are claimed are detailed in the statement of the case in pages 14 and 15 of the printed papers. They all related to the commencement of certain kuries in each of the three years and are moneys expended for commission paid for canvassing, stationery, advertisement, registration, travelling expenses, stamp paper, postage and printing. In their nature, they are not capital expenditure. But it is contended that they are in the nature of preliminary expenses for the commencement of a new business and are, thereof, not allowable. We do not think that there has been the commencement of any new business by the assessee. In Hindustan Commercial Bank Ltd., In re [ 21 I.T.R. 353.], it has been held that similar expenses for opening a new branch are allowable as revenue expenditure falling under section 10(2)(xv) of the Income-tax Act. And the Supreme Court in a decision in Commissioner of Income-tax v. Finlay Mills Ltd. [ 20 I.T.R. 475;  S.C.R. 11.], held that the expenses for registering a trade-mark are allowable under the same section of the Indian Income-tax Act. We do not think that the rulings relied on by counsel for the department in Western India Plywood Ltd. v. Commissioner of Income-tax [ 38 I.T.R. 533.] and Nagpur Electric Light and Power Co. Ltd. v. Commissioner of Income-tax [ 6 I.T.C. 28.] are applicable. In both these cases the question was whether expenses incurred in connection with the raising of a debenture loan, though, no doubt, for the purpose of finding funds for the business carried on by the assessee, are allowable under section 10(2)(xv). It was held in these cases that the amounts cannot be deducted. These cases are clearly distinguishable.
We think it is the principle laid down in Hindustan Commercial Bank Ltd., In re [ 21 I.T.R. 353.] and Commissioner of Income-tax v. Finlay Mills Ltd. [ 38 I.T.R. 533.], already referred to, that will apply to the facts of this case. We, therefore, answer the two questions referred to us in the affirmative and in favour of the assessee. There will be no order as to costs.