The judgment of the court was d delivered by
VEERASWAMI J. - In respect of the assessment year 1959-60, the assessee claimed deduction of Rs. 2,615 as legal expense. 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 circumstance the reference comes before us under section 99 (1) 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 is not an admissible deduction in the computation of the assessees business income under section 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 the new route permits. The assessee is a fleet owner as we are tools and carries on transport business. It is argued that the expenditure incurred by payment of the lawyers fee in getting the three route permits is expenditure of a revenue character and is entitled to deduction under section 10(2)(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, conceits of running of buses and no bus can be run except on permit. When a new permit is obtained, in our opinion, it amount be said that the expenses incurred therefor a 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 least so far as the is court is concerned that such a permit is property, which is that basis for starting the business of running the us 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 item and the 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 a provisions. It is clear, therfore, 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 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. :
"It may also comprehend payment of statutory dues and taxes imposed as a per-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 be a permit to be obtained. We are not inclined to think that the expenditure obtaining a new permit can be regarded as expenditure laid out for the propose of the business of running buses covered by other permits. On that view, we answer the question against the assessee with costs; counsels fee Rs. 250.