JUDGMENT <NAME>, J.

1. This appeal is brought from an order of <NAME> dated June 11, 1959, whereby certain proceedings commenced by a notice or a letter issued by the Additional Collector of <ORG> dated September 15, 1958, were quashed by a writ in the nature of certiorari and a mandamus issued directing the <ORG> authorities not to give effect to the notice. The Additional Collector of <ORG> has accordingly appealed.

2. The respondents, <NAME> and others, are a firm, carrying on business, under the name and style of <ORG>, of importing betelnuts from eastern countries. They had an import licence valid upto the 30th of September 1957 which authorised them to import betelnuts worth about Rs. 24800/- and odd. The firm had entered into an agreement with <ORG> of Penang for supply of 80 bags of betelnuts, the total value of which was Rs. 10,322 52 nP. A consignment was booked by <ORG> and the freight was insured with <ORG> The firm's clearing Agents were instructed to prepare the Bill of Entry and to submit the same to the <ORG> in time to avoid demurrage. The shipping documents were received from the Bank concerned and the Clearing Agents paid on the firm's behalf <ORG> duty on the said 80 bags of betelnuts amounting to Rs. 18,296/25 nP. The payment was made on 4-6-1957. On the next day, the consignment was attempted to be cleared from the Port Commissioner's shed, but a part of it could not be traced. Only 26 bags were taken delivery of and the balance of 54 bags remained untraced. Eventually, the Port Commissioners issued a short-landing certificate, in the prescribed form. On the strength of this certificate, an application was made by the respondent firm for refund of proportionate, customs duty. Upon hearing the firm's representative, the <ORG> authorities issued a refund order on the 7th January 1958, which entitled the respondent firm to receive back a sum of Rs. 12,855/-. This order was quashed in due course and taken credit of by the firm on the 13th January 1958.

3. On the 15th of September 1958, the Additional Collector of <ORG> issued a notice to the respondent firm by which it was proposed to re-open the case for review under Section 190-A of the Sea <ORG> Act with a view to recover the amount which the <ORG> claimed had erroneously been refunded to the respondent firm. The respondents were asked to submit within ten days from the date of despatch of the letter a written representation if they wanted to make one and to inform the <ORG> authorities whether the firm wished to be heard in the matter.

4. The case made in the said notice dated the 15th September 1958 was that consequent upon certain scrutiny made, it appeared that after the relevant Bill of Entry had been presented to the <ORG> on the 23rd May, 1957, a part of the consignment, in respect of which a short landing certificate was issued, had been sunk in the river Hooghly and submerged in the river bed. The appellants' contention appearing from the notice seems to be that since the Bill of Entry had been presented to the <ORG> House on the 23rd May 1957 and the goods were submerged in the fiver sometime thereafter, the <ORG> were entitled to retain the full amount of duty; consequently the order of refund made in favour of the respondent firm had been irregular. The loss in the present case was described as part of the ordinary trade risks involved in every commercial venture.

5. On receipt of this notice dated the 15th September 1958, the firm wrote to the appellants on the 25th of that month, challenging the appellants' jurisdiction to re-open the proceedings and to ask for refund of the sum which had already been paid to the firm on account of the shortlanding of a part of the consignment. In this communication, the firm denied that liability to pay duty on account of the entire consignment even though part of it was shortlanded was part of the ordinary trade risks. In substance, the respondents' contention was that the <ORG> authorities had no jurisdiction to re-open the matter in the circumstances that had happened.

6. Presumably, the appellants were not impressed with the respondents' point of view and proposed to continue the proceedings. The respondent firm were informed that the matter would be heard on the 28th October 1958 at a stated hour. The firm asked for postponement and eventually intimated their intention to move this Court for appropriate orders quashing the proceedings commenced against them. Accordingly, the respondent firm applied to this Court under Article 226 of the Constitution and a Rule Nisi was issued by <ORG> on December 12, 1958, requiring the customs authorities to show cause why they should not cancel or withdraw their notice dated the 15th day of September 1958 and the subsequent notices and forbear from giving effect to them.

7. After hearing the parties <NAME>, <NAME> made the Rule absolute and issued a writ in the nature of certiorari quashing the letter or notice in question and all proceedings based upon it and another writ in the nature of mandamus directing the <ORG> authorities not to give effect to the notice.

8. Being dissatisfied with the decision of the learned trial Judge, the appellants have preferred this appeal.

9. The main contention before us has been that the learned trial Judge misconstrued Sections 39 and 190A of the Sea Customs Act. It is said that the misreading of these two sections has resulted in an erroneous decision and caused failure of justice.

10. In order to be able to appreciate this contention, it would be necessary to notice the two sections. Section 39 is in these words :

'39. (1) When customs-duties or charges have not been levied or have been short-levied through inadvertence, error, collusion or misconstruction on tile part of the officers of <ORG>, or through mis-statement as to real value, quantity or description on the part of the owner, or when any such duty or charge, after having been levied, has been, owing to any such cause, erroneously refunded, the person chargeable with the duty or charge which has not been levied or which has been so short-levied or to whom such refund has erroneously been made, shall pay the duty or charge or the deficiency or repay the amount paid to him in excess, on a notice of demand being issued to him within three months from the relevant date as defined in Sub-section (2) and the <ORG>-Collector may refuse to pass any goods belonging to such person until the said duties or charges or the said deficiency or excess be paid or repaid.

(2) For the purpose of Sub-section (1) the expression "relevant date'' means :

(a) in a case where the duty or charge has not been levied, the date on which the <ORG>-officer makes an order for clearance of the goods;

(b) in a case where the duty is reassessed under Section 29A, the date of reassessment;

(c) in a case where the duty is provisionally assessed under Section 29B, the date of final adjustment of duty;

(d) in a case where the duty or charge has been erroneously refunded the date of refund; and

(e) in any other case, the date of the first assessment."

11. Section 190A is as follows :

"190A. (1). <ORG>--authority may of its own motion or otherwise call for and examine the record of any proceeding in which an officer of <ORG> has passed any decision Or order under this Act for the purpose of satisfying itself as to the legality or propriety of any such decision or order and may pass such order thereon as it thinks fit:

Provided that no order prejudicial to any person shall be passed under this Section unless such person has been given a reasonable opportunity of making a representation against the proposed order.

(2) The powers conferred upon the Chief-<ORG>-authority under Sub-section (1) may also, in the like manner and subject to the like conditions, be exercised by the Chief <ORG>-officer in respect of any decision or order passed under this Act by any officer of <ORG> subordinate to him.

(3) No decision or order passed by an officer of <ORG> shall be revised under this Section by the Chief <ORG>-authority or a Chief <ORG>-officer, as the case may be, after the expiry of two years from the date of the decision or order."

12. It is to be observed that Section 39 occurs in Chapter V which deals with the levy of and exemption from <ORG> duties. It is one of a group of sections which speak of dutiable goods of the power to fix tariff values of the power to exempt from <ORG> duties, of the obligation of the owner to declare the real value of the goods in the Bill of Entry, of shipping bills, of assessment of duty and of various other matters in connection with the levy of <ORG> duties.

13. Section 190A occurs in Chapter XVII which prescribes the procedure relating to offences and appeals. It is one of a number of sections which regulate proceedings in connection with offences, appeals etc. under the Sea <ORG> Act. The power of holding search on suspicion, power to screen or X'ray bodies of persons in order to detect secreted good's power of the officers of <ORG> to summon persons to give evidence and produce documents, power to issue search warrants, power to seize things liable to confiscation, power to hold adjudication proceedings for confiscation and imposition of penalties, enforcement of obligations created by the Act, and punishment for dereliction of statutory duties and for commission of offences are amongst the various matters provided for in the Chapter.

14. It seems plain that whereas Chapter V of the Act deals with rights and liabilities, Chapter XVII deals with procedure. In this sense, Chapter V may to said to contain substantive provisions whereas Chapter XVII contains procedural provisions. Broadly speaking, the various sections in Chapter XVII constitute the machinery for the enforcement of obligations imposed by the Statute.

15. It has been argued on behalf of the appellants that Section 190A is an independent provision which must receive full effect and cannot, in any way, be subordinated to any thing contained in Section 39. The respondents' contention has clearly been that in view of the provision contained in Section 39, they cannot be asked to return any part of the duty which was refunded to them, after the expiry of three months from the date of refund. It is to be recalled that a sum of Rs. 12,855 was refunded to the respondents On the 13th January, 1958. The contention is that even if this amount was erroneously refunded to them, no proceedings can be taken for recovery of the amount unless they were commenced by a notice of demand issued in terms of Section 39 within a period of three months from the date of refund. In this case, the notice by which the respondent firm were called upon to show cause against the proposed order of repayment of the amount refunded was clearly time-barred.

16. The appellants' contention has been that Section 39 is completely out of the way. It is irrelevant in the present context since what the <ORG> authorities proposed to do was to revise under Section 190A of the Act the order, of refund which had been previously made; that order was, in the opinion of the authorities, an erroneous order which was fit to be revised. The proceeding commenced or intended to be commenced by the notice dated the 15th September was a proceeding in revision in terms of Section 190A which is a complete code in itself and under which any order could be revised within a period of two years. The effect of this contention is that even though Section 39 might have imposed a limit of time within which a notice of demand has to be issued, a proceeding commenced under Section 190A is not controlled by what is provided for in Section 39. The last named Section has its own period of limitation which regulates a proceeding taken under it, but the present proceeding being one under Section 190A is not governed by Section 39.

17. The learned trial Judge rejected the contention on behalf of the <ORG> authorities and held that Section 190A is a procedural Section and it could not be said that it is independent of Section 39. He observed that "the bar of limitation under Section 39 must be applied to the facts of this case and the Additional Collector of <ORG> did not act in accordance with law in an attempt to re-open the matter under Section 190A of the Sea <ORG> Act."

We find ourselves in complete agreement with the view taken of the matter by the learned Judge.

18. It seems plain that Section 190A would be nearly void of content if the substantive provisions in the Act were to be read completely divorced from it. In our opinion, Section 190A is entirely procedural. It gives wide powers to the <ORG> authority to call for and examine the records of any proceeding for the purpose of satisfying himself as to the legality or propriety of any decision or order made by a subordinate officer of the <ORG>. Reading the Section as it is, it seems that it provides for correcting mistakes and errors committed by officers subordinate to the <ORG> authority. But such correction Or revision is permitted within a period of two years. But where, however, in consequence of such revisional proceeding any order is likely to be made which may prove prejudicial to any person, the Section provides that no such order can be made adverse to that person unless reasonable opportunity has been given to the person concerned of making a representation against the proposed order. It may well be that a person aggrieved may apply to the <ORG> authority for relief under Section 190A in a given case and if he so applies, the <ORG> authority would be quite entitled to give him relief provided there is no bar to the grant of such relief. For example, where a person has been charged to duty, in excess of what he is required to pay under the Act, he may apply to the <ORG> authority for redress Or the <ORG> authority may of his own motion give him redress; but in such cases it would not be possible to give relief or to make any adverse order unless the application for such relief Or the step in aid of such adverse order is made or taken within the limit of time prescribed by the Statute. In this case, the <ORG> authority could certainly ask for repayment of an amount erroneously refunded provided the notice of demand wag issued within the period of three months prescribed in Section 39. Similarly, under Section 40 of the Act which speaks of refund of charges overpaid to the <ORG>, no relief can be granted to the person concerned unless the application is made within a period of three months,

19. The power to reopen a case may reside in the <ORG> authority in terms of Section 190A. That power can be exercised within a period of two years but in a case like the one before us which is completely covered by the specific provision contained in Section 39 of the Act, it cannot be said that the limit of time prescribed in the Section is wiped out or superseded by the period of limitation prescribed in Section 190A. There can be no question that Section 39 is a specific provision under which the respondents' case clearly falls. According to the appellants, a sum of money had been erroneously refunded to them. In order that the amount thus erroneously paid might be recovered, a notice of demand has to issue in terms of Section 39 of the Sea Customs Act. In our view, it is idle to contend that since Section 190A prescribes a period of two years within which the revisional powers of the <ORG> authority may be exercised, that has the effect of destroying the provision of Section 39 which is a clear and specific provision in the same Statute.

20. It seems clear that when <ORG> duty, after having been levied, has been erroneously refunded owing to one or other of the causes mentioned in Section 39, the person to whom such refund has been erroneously made shall repay the amount on a notice of demand being issued to him within three months from the date of refund. Similarly, by Section 40, the Act provides that <ORG> duty which was erroneously paid for similar causes will be refunded only if the claim for refund is made within three months from the date of such payment. The point to note is that the claim for levy of duty by the <ORG> authorities or claim for refund against them has to be made within the prescribed period. These provisions are unambiguous. The <ORG> have to construe them as they find them. The <ORG>' right to levy duty unpaid or short-paid or the citizen's right to refund of duty erroneously paid or overpaid have been placed on the same footing. The question then arises, whether by recourse to Section 190A, the time for levying of duty not paid or under-paid or erroneously refunded can be enlarged in favour of the <ORG> authorities. The direct effect of such enlargement of time will be to destroy completely the earlier provision contained in Section 39, limiting the time for the <ORG> to claim payment of duty not levied or short levied or erroneously refunded. If such was the result intended by the legislature, it would amount to taking away something with the left hand which was given with the right hand. There can be no extension of the <ORG>' rights without corresponding extension of the citizen's obligations. Interest of revenue cannot be pleaded in extension of such right in favour of the <ORG> authorities. Equity has no place in the law of limitation and we are to construe these provisions strictly. It can never be right to think that the legislature intended to keep alive in favour of the <ORG>, in this indirect manner a claim already extinguished by efflux of time. In our view, there is no real conflict between Section 39 and Section 190-A; and even if there was one, it would be the business of the <ORG> to harmonise the two provisions so as to provide a workable and well-reasoned basis on which each might fulfil its purpose in aid of the object of the enactment. Section 190-A, which is a new provision introduced in 1955, embodies the experience of the working of the Act Words of wide import appear to have been deliberately chosen so as to give the Chief <ORG> authority power to exercise effective control over all matters, administrative or other, with the very inteligible safeguard that no one can be adversely affected in consequence of the exercise of such power without the person concerned being first heard. The very amplitude of power given by the Section would be a reason to guard against its abuse; and we consider an attempt to enlarge time for claim to payment of duty not levied or short-levied or erroneously refunded, by appealing to its provisions, would be an instance of such abuse. The Section cannot be read so as to destroy or defeat the earlier express provision contained in Section 39 of the Act.

21. The rule is well-known that where a general intention is expressed and the Act expresses also a particular intention, incompatible with the general intention, the particular intention is to be considered in the nature of an exception. <ORG> endorsed this view in the case of <CITATION> . . In our opinion, the specific provision relating to limitation contained in Section 39 cannot possibly be destroyed or over riden by the provision in Section 190A whereby the <ORG> authority has been given power to revise orders previously made within, a period of two years. There can, in our view, be no question that the period of limitation prescribed in Section 39 must prevail.

22. In our opinion, the present case is completely covered by Section 39 of the Sea <ORG> Act winch is a specific provision. According to the notice issued by the <ORG> authorities, a part of the duty was erroneously refunded. Consequently if action was to be taken, it was required to be taken under Section 39 within the period of three months prescribed in the Section itself. The Section speaks of "relevant date". That expression is defined and it means, in this instance, the date of refund. We have indicated that the date of issue of notice was long after the date of refund. We cannot accept the contention that since the notice speaks of action proposed to be taken in terms of Section 190A, the period of limitation prescribed in Section 39 of the Act is wiped out, to the detriment of the person called upon to show cause against the proposed recovery of the amount said to have been erroneously refunded. There can be no question that different periods of limitation have been prescribed for different purposes. In order to enable the Chief <ORG> authority to exercise a general power of superintendence over decisions and orders made by subordinate officers of the <ORG>, a longer period of limitation, has been prescribed. This is quite understandable, but surely the period of limitation in Section 190A cannot override the express provision in Section 39 which limits the issue of notice of demand for payment of duties not levied or short-levied or erroneously refunded to a period of three months.

23. It was then argued on behalf of the appellants that the proceedings under Article 226 of the Constitution were premature. It has been said that except a notice issued under Section 190A of the Sea <ORG> Act, nothing further had been done and that being so, the jurisdiction, of this <ORG> was improperly invoked by the application under Article 226 of the Constitution. We have been referred to a decision of the learned trial Judge himself reported in <CITATION> , , in which he held that where a notice had been merely issued requiring a person to show cause in connection with certain proceedings in which it was alleged that he had contravened the terms and conditions of a licence, an application under Article 226 of the Constitution directly on issue or, such notice was premature. It is true, in that case nothing further had been done except the issue of a notice by the Collector of <ORG> requiring the person proceeded against of show cause why certain fluorescent tubes and accessories should not be confiscated under Section 167 (8) of the Sea <ORG> Act. The learned Judge was however, careful to point out that in that case no question of jurisdiction had been raised. If the <ORG> authorities had jurisdiction to issue the notice requiring the person concerned to show cause against the proposed confiscation of the fluorescent tubes and accessories, then surely' an application under Article 226 at that stage would be premature. But the learned Judge observed that if the objection to the proceedings had been founded upon want of jurisdiction, the position might have been different. In the present case, that- is precisely the point. We have noticed that the first thing that the respondents did in regard to the notice dated the 15th September 1958, was to object to the proceedings on the ground that the appellants had no jurisdiction to take them. Where, therefore, there is that initial want of jurisdiction to commence a proceeding there can, in our view, be no reason whatever why the person proceeded against should be prevented from seeking the assistance of the <ORG> under Article 226 of the Constitution for the purpose of preventing harassment to himself. There can be no question that the issue of notice dated September 15, 1958 is a definite step in aid of the proceeding to revise an earlier order; and where no proceeding can at all be taken for utter want of jurisdiction, there can, in our view, be no ground for shutting out relief under Article 226 to the person concerned. The respondents' contention of want of jurisdiction is founded upon the plain words of Section 39. That section, as we have indicated, prescribes a definite period of time within which the notice of demand for recovery of duty not levied, short-levied or erroneously refunded has to be issued. If, on the face of things, such notice was not issued in time, surely the person affected has a right to seek the <ORG>'s assistance for the purpose of stopping a proceeding which is bound to be infructuous and abortive. We do not think, therefore, that this objection to the application under Article 226 being premature has any substance.

24. These are the main contentions which have been put forward on behalf of the appellants In this case. We have not been able to accept them and we must hold, in agreement with the learned trial Judge, that the notice to show cause, by which the proceedings were commenced or about to be commenced, must be quashed and the appellants directed not to give effect to the same.

25. The appeal must, therefore, fail and is accordingly dismissed with costs.

<NAME>, <NAME>

26. The main point involved in this appeal is the question of construction of Sections 39 and 190A of the Sea <ORG> Act. It is clear that Section 39 is a substantive provision which creates certain rights in favour of the <ORG> authorities to recover customs duties and charges and it clearly imposes liability to pay such duties and charges on persons liable to pay the same. But it also prescribes a period of limitation within which the payment is to be demanded. The condition precedent to the accrual of liability to pay is that the <ORG> authorities must issue a notice of demand to the person liable to pay within three months from the relevant date as defined or explained in Sub-section (2) of Section 39 of the Sea <ORG> Act. If no such notice of demand is issued within the prescribed period, the amount of claim becomes irrecoverable. The Section provides for certain contingencies under which certain customs, duties and charges which nave escaped levy and certain refunds granted under certain specified circumstances can be recovered. The <ORG> authorities' case is that the refund had been made erroneously to the respondents. (See the letter dated the 15th September 1958). So the contingency or case is one which falls under Section 39.This being the position, can it be said that although, no notice of demand was issued within three months of the date of refund and the claim for repayment has become irrecoverable, yet, by the indirect process of revision or review as envisaged in Section 190A of the Sea <ORG> Act, the order of refund can be revoked and the respondents made liable to repay the amount refunded? To give countenance to such interpretation will be to make the provisions of Section 39 nugatory. The result of such, construction will be that in every case of short levy or escapement of levy or of erroneous refund, the provisions of Section 190A may be availed of, provided it is so availed of within a period of two years as provided in Section 190A and the bar of limitation as specified' in Section 39 can be got rid of or circumvented in this manner. Such an absurd intention cannot be imputed to the legislature. In my view, Section 190A has not the effect of overriding Section 39 but it is subject to the said section. So this main point is devoid of any substance.

27. The other point raised on behalf of the appellant is that the application under Article 226 of the Constitution is not maintainable as it is a premature one. It is submitted that unless an adjudication is made or until the order is revised, the respondents have no grievance or cause of action. Mere notice to show cause does not impose any liability to repay nor does it furnish any cause of action. This contention also appears to have no force. The respondents have acquired a valuable right to retain an amount refunded by reason of lapse of time. The infraction of that right is threatened by the proceeding sought to be started by the notice dated the 15th September 1958. If the respondents do not take any steps to have the notice declared as invalid or as one tending to give rise to a useless and infructuous proceeding, they will have to suffer unnecessary harassment and expense of resisting the proceeding and defending themselves against an illegal claim. The amount being irrecoverable by reason of Section 39, by revising the order of refund or by revoking it, the <ORG> authorities cannot realise the amount from the respondents in any case. So it is difficult to see why the respondents cannot put an end to the proceeding at the very initial stage. There is no jurisdiction in the <ORG> authorities to re-open a claim barred by limitation by having recourse to Section 190A. So any step taken to initiate a proceeding to re-open a claim can be prohibited or quashed as being one taken without jurisdiction.

28. I, therefore, agree that this appeal should be dismissed with costs as proposed by my Lord.


PETITIONER: <ORG>. Vs. RESPONDENT: THE COMMISSIONER OF INCOME-TAX,WEST BENGAL DATE OF JUDGMENT: 11/11/1954 BENCH: BHAGWATI, <NAME>: BHAGWATI, <NAME>, <NAME>, <NAME>, T.L. VENKATARAMA CITATION: 1955 AIR 89 1955 SCR (1) 876 ACT: Indian Income-tax Act (XI of 1922), s. 10(2)(xv) -Capital expenditure-Revenue expenditure-Meaning of and distinction between the two. HEADNOTE: Section 10(2)(xv) of the Indian Income-tax Act, 1922, uses the term 'capital expenditure' for which no allowance is given to the assessee. The term 'capital expenditure' is used as contrasted with the term 'revenue expenditure in respect of which the assessee is entitled to allowance under section 10(2) (xv) of the Act. As pointed out by the Full Bench of the Lahore High Court in <NAME>, In re [(1946) 15 I.T.R. 185] it is not easy to define the term 'capital expenditure' in the abstract or to lay down any general and satisfactory test to discriminate between a capital and a revenue expenditure. Though it is not easy to reconcile all the decided cases on the subject, as each case had been decided on its peculiar facts, some broad principles could be 973 deduced from what the learned judges have laid down from time to time: (1)Outlay is deemed to be capital when it is made for the initiation of a business, for extension of a business, or for a substantial replacement of equipment: vide Lord Sands in Commissioners of Inland Revenue v. <ORG> (  13 T. C. 1) and <ORG> v. <NAME> (  2 T. C. 239). (2)Expenditure may be treated as properly attributable to capital when it is made not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade: vide <NAME> L.C., in <NAME> v. <ORG> ( 10 T.C. 155). If what is got rid of by a lump sum payment is an annual business expense chargeable against revenue, the lump sum payment should equally be regarded as a business expense, but if the lump sum payment brings in a capital asset, then that puts the business on another footing altogether. Thus, if labour saving machinery was acquired, the cost of such acquisition cannot be deducted out of the profits by claiming that it relieves the annual labour bill, the business has acquired a now asset, that is, machinery. The expressions 'enduring benefit' or 'of a permanent character' were introduced to make it clear that the asset or the right acquired must have enough durability to justify its being treated as a capital asset. (3)Whether for the purpose of the expenditure, any capital was withdrawn, or, in other words, whether the object of incurring the expenditure was to employ what was taken in as capital of the business. Again, it is to be seen whether the expenditure incurred was part of the fixed capital of the business or part of its circulating capital. Fixed capital is what the owner turns to profit by keeping it in his own possession. Circulating or floating capital is what he makes profit of by parting with it or letting it change masters. Circulating capital is capital which is turned over and in the process of being turned over yields profit or loss. Fixed capital, on the other hand, is not involved directly in that process and remains unaffected by it. One has got to apply these criteria, one after the other from the business point of view and come to the conclusion whether on a fair appreciation of the whole situation the expenditure incurred in a particular case is of the nature of capital expenditure or revenue expenditure in which latter event only it would be a deductible allowance under section 10(2)(xv) of the Indian Income-tax Act, 1922. The question has all along been considered to be a question of fact to be determined by <ORG> on an application of the broad principles laid down above and the Courts of law would not ordinarily interfere with such findings of 124 974 fact if they have been arrived at on a proper application of those principles. The assessee acquired from <ORG> a lease for 20 years (with a clause for renewal) in respect of certain limestone quarries situated in Khasi and Jaintia Hills. In addition to the rents and royalties for lease the assessee as the lessee had to pay two further sums as protection fees' under the covenants contained in clauses 4 and 5 of the lease. Under clause 4 the portection was in respect of another group of quarries called the Durgasil area, and the lessor undertook not to grant for this area any lease, permit or prospecting licence regarding limestone to any other party except with a condition that no limestone should be used for the manufacture of cement. This protection was given in consideration of a sum of Rs. 5,000 annually payable by the assessee during the whole period of the lease. Under clause 5 a further protection was given by the lessor to the lessee in respect of the whole of the Khasi and Jaintia Hills District for which lessee was to pay annually Rs. 35,000 to the lessor for 5 years. According to these covenants the assessee in his capacity as the lessee paid the lessor a sum of Rs. 40,000 for the accounting years 1944-45 and 1945-46. Held, that the sum of Rs. 40,000 was a capital expenditure inasmuch as it was incurred for the acquisition of an asset or advantage of an enduring nature for the whole of the business and Was no part of the working or operational expenses for carrying on the business of the assesses. Accordingly the payment of Rs. 40,000 was not an allowable deduction under section 10(2)(xv) of the Indian Income-tax Act, 1922. Countess Warwick Steamship Co. Ltd. v. <NAME>  2 K.B. 292), <ORG> v. <NAME> [18871 2 T.C. 239), <ORG> v. <NAME> (  5 T.C. 529), <NAME> (Surveyor of Taxes) v. <ORG> ( [19151 6 T.C. 671), <NAME> v. <ORG> ( 10 T.C. 1.55), <ORG>'s case (  6 T.C. 399), <ORG> v. <NAME> (H. M. Inspector of Taxes), ( [19211 12 T.C. 256), <ORG> v. <NAME> (  1 K.B. 124), <ORG> v. <NAME> (H. M. Inspector of Taxes), ( 18 T.C. 280). <ORG> v. <NAME> (H. M. Inspector of Taxes) (I 19341 19 T.C. 390), <ORG>, Bombay v. Commissioner of Income-tax, Bombay Presidency and Aden ([19371 L.R. 64 I.A. 215), <ORG> and <ORG> v. <NAME> ( 61 C.L.R. 337), <NAME> and Sons. v. Commissioner of Income-tax ( 1-4 I.T.R. 66), <CITATION> . ( 15 I.T.R. 105), <ORG> v. Commissioner Of Income-tax, U.P. & Ajmer Merwara ( 17 I.T.R. 13), <CITATION> ., ( S.C.R. 11), <CITATION> . & Co. 975 (  17 I.T.R. 317) and <CITATION> . (  2 K.B. 184), referred to. <NAME>, In re, (  15 I.T.R. 185), approved. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 162 of 1952. Appeal from the Judgment and Order dated the 7th day of June, 1951, of <ORG> at Calcutta in Income-tax Reference No. 60 of 1950 arising out of the Order dated the 22nd day of November, 1949, of <ORG> in I.T.A. Nos. 1026 and 1027 of 1948-49 <NAME> for the appellant.

<NAME> for the respondent.

1954. November, 11. The Judgment of the Court was delivered by, BHAGWATI J.-This appeal from the judgment And order of <ORG> with leave under section 66-A (2) of the Indian Income-tax Act raises an interesting question as to the line of demarcation between capital expenditure and revenue expenditure. On the 14th November, 1938, the appellant company acquired from <ORG> a lease of certain limestone quarries, known as the Komorrah quarries situated in the Khasi and Jaintia Hills District for the purpose of carrying on the manufacture of cement. The lease was for 20 years commencing on the 1st November, 1938, and ending on the 31st October, 1958, with a clause for renewal for a further term of 20 years. The rent reserved was a half-yearly rent certain of Rs. 3,000 for the first two years and thereafter a half-yearly rent certain of Rs. 6,000 with the provision for payment of further royalties in certain events. In addition to these rents and royalties two further sums were payable under the special covenants contained in clause& 4 and 5 of the lease as " protection fees ". Under clause 4 the protection was in respect of another group of quarries called the Durgasil area, the lessor undertaking not to grant any lease, permit or prospecting licence regarding the limestone to any other party therein without a condition that no limestone should be used for the manufacture of cement in consideration of a sum of Rs. 5,000 payable annually during the whole period of the lease. Under clause 5 a further protection was given in respect of the whole of the Khasi and Jaintia Hills District, a similar undertaking being given by the lessor in consideration of a sum of Rs. 35,000 payable annually but only for 5 years from the 15th November, 1940. In the accounting years 1944-45 and 1945-46 the company paid its lessor sums of Rs. 40,000 in accordance with these two covenants and claimed to deduct the sums in the computation of its business profits under the provisions of section 10(2) (xv) of the Income-tax Act in the assessments for the assessment years 1945-46 and 1946-47. The Income-tax Officer, the Appellate Assistant Commissioner and <ORG> rejected the contention of the company and the following question, as ultimately reframed, was at the instance of the company referred by the <ORG> to <ORG> for its decision :-

" Whether, in the circumstances of the case, the two sums of Rs. 5,000 and Rs. 35,000 paid under clauses 4 and 5 of the deed of the 14th November, 1938, were rightly disallowed as being expenditure of a capital nature and so not allowable under section 10(2) (xv) of the Indian Income-tax Act ". <ORG> answered the question in the affirmative and hence this appeal.

Clauses 4 and 5 of the deed of lease may be here set out :-

4. The lessee shall pay to the lessor Rs. 5,000 (Rupees five thousand) only annually during the period of the lease on November 15th starting from November 15th, 1938, as a protection fee. In consideration of that protection fee the lessor undertakes not to allow any person or company any lease permit or prospecting licence for limestone in the group of quarries as described in Schedule 2- and delineated in the plan thereto annexed and therein coloured blue called the Durgasil area without a condition in such lease permit or prospecting licence that no limestone ,shall be used for the manufacture of cement.

5.Besides the above protection fee the lessee shall pay to the lessor annually the sum of Rs. 35,000 (Rupees thirty five thousand) only for five years starting from the 15th day of November, 1940, as a further protection fee so long as the total amount of limestone quarried by the lessee in a year does not exceed 22,00,000 maunds per year whether quarried in the area of this lease or elsewhere or obtained by purchase from other quarries in the Khasi and Jaintia Hills by the lessees. If, however, in any year the total amount of limestone converted into cement at the lessee's Sylhet,Factory exceed 22,00,000 maunds the lessee will be entitled to an abatement at the rate of Rs. 20 for every 1,000 maunds quarried in excess of 22,00,000 maunds and the lessee shall pay the sum of Rs. 35,000 less the abatement calculated on the basis hereinbefore mentioned. Limestone which is not converted into cement at the lessee's factory in Sylhet district will not entitle the lessee to any abatement in the protection fee. The lessor in consideration of the said payment undertakes not to allow any person or company any lease permit or prospecting licence for limestone in the whole of Khasi and Jaintia Hills district without a condition in such lease permit or prospecting licence that no limestone extracted shall be used directly or indirectly for the manufacture of cement. The lessor will be empowered to terminate this agreement for the payment of a protection fee at any time after it has run for 5 years by giving six month,%' notice in writing by registered letter addressed to 11, Clive Street, Calcutta but the lessee will not be entitled to terminate this agreement during the currency of the lease except with the consent of the lessor.

It is not clear as to what was meant by the last provision contained in clause 5, the lessee in the event of his having paid the sum of Rs. 35,000 for the 5 years having nothing else to do but enjoy the benefit of the covenant on the part of the lessor during the subsequent period of the lease. This provision is however immaterial for our purposes.

The line of demarcation between capital expenditure and revenue expenditure is very thin and learned Judges in England have from time to time pointed out the difficulties besetting that task. Lord <NAME> a Dovey v. Cory(1), administered the following warning:-

I do not think it desirable for any tribunal to do that which <ORG> has abstained from doing-that is, to formulate precise rules for the guidance or embarrassment of business men in the conduct of business affairs. There never has been, and I think there never will be, much difficulty in dealing with any particular case on its own facts and circumstances; and, speaking for myself, I rather doubt the wisdom of attempting to do more." <NAME> also expressed himself much to the same effect in Countess Warwick Steamship Co. Ltd. v. Ogg(1): "

It is very difficult, as I have observed in previous cases of this kind, following the highest possible authority, to lay down any general rule which is both sufficiently accurate and sufficiently exhaustive to cover all or even a great number of possible cases, and I shall not attempt to lay down any such rule."

Certain broad tests have however been attempted to be laid down and the earliest was the one indicated in the following observations of <ORG> in the course of the argument in <ORG> v. <NAME> (3) :- " You do not use it 'for the purpose of' your concern, which means, for the purpose of carrying on your concern, but you use it to acquire the concern."

The expenditure in the acquisition of the concern would be capital expenditure; the expenditure in carrying on the concern would be revenue expenditure.

Lord <NAME> in <ORG> v. <NAME> ( 4), suggested another criterion at page 536 :

Now, I don't say that this consideration is absolutely final or determinative, but in a rough way I think it is not a bad criterion of what is capital (1) [1901] A.C. 477, 488.

(2) [1924] 2 K.B. 292, 298.

(3)(1887) 2 T.C. 239, 243.

(4)(1910) 5 T.C. 529, 536.

expenditure as against what is income expenditure to say that capital expenditure is a thing that is a going to be spent once and for all, and income expenditure is a thing that is going to recur every year."

This test was adopted by <NAME> in <NAME> (Surveyor of Taxes) v. Vickers Ltd. (1), and after quoting the above passage from the speech of Lord <NAME> he observed that the real test was between expenditure which was made to meet a continuous demand for ex. penditure as opposed to an expenditure which was made once for all. He however suggested in the course of his judgment another view-point and that was whether the particular expenditure could be put against any particular work or whether it was to be regarded as an enduring expenditure to serve the business as a whole, thus laying the foundation for the test prescribed by Viscount <NAME> in <NAME>'s case (2). <NAME> v. <ORG> (2), laid down what has almost universally been accepted as the test for determining what is capital expenditure as distinguished from revenue expenditure. Viscount <NAME> there observed at page 192:-

"But there remains the question, which I have found more difficult, whether apart from the express prohibitions, the sum in question is (in the words used by Lord <NAME> in <NAME>'s case(3) ), a proper debit item to be charged against incomings of the trade when computing the profits of it; or, in other words, whether it is in substance a revenue or a capital expenditure. This appears to me to be a question of fact which is proper to be decided by the Commissioners upon the evidence brought before them in each case ; but where, as in the present case, there is no express finding by the Commissioners upon the point, it must be determined by the Courts upon the materials which are available and with due regard to the principles which have been laid down in the authorities. Now, in <ORG> v. <NAME> (4). Lord <NAME>, as Lord President of <ORG>, expressed the opinion that "in a rough way" it was (1)(1915) 6 T.C. 671.

(2)(1925) 10 T.C. 155.

(3)(19I4) 6 T.C. 399.

(4)(19IO) 5 T.C. 529. 536, "not a bad criterion of what is capital expenditure as against what is income expenditure to say that capital expenditure is a thing that is going to be spent once and for all and income expenditure is a thing which is going to recur every year" ; and no doubt this is often a material consideration. But the criterion suggested is not, and was obviously not, intended by Lord <NAME> to be a decisive one in every case; for it is easy to imagine many cases in which a payment, though made "once and for all", would be properly chargeable against the receipts for the year........ But when an expenditure is made, not only once and for all. but with a view to bringing into existence an asset or an advan- tage for the enduring benefit of a trade, I think that there is very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital."

Viscount <NAME> however in <NAME> v. -Moore (H. M. Inspector of Taxes) (1), suggested another test and that was the test of fixed or circulating capital, though even there he observed that it was not necessary to draw an exact line of demarcation between the fixed and circulating capital. The line of demarcation between fixed and circulating capital could not be defined more precisely than in the description of <NAME> of fixed capital as what the owner turns to profit by keeping it in his own possession, and circulating capital as what he makes profit of by parting with it and letting it change masters. This test was adopted by Lord <NAME> in <ORG> v. <NAME> (2), where he observed:-

" I am inclined to think that the question whether the money paid is provided from the fixed or the circulating capital comes as near to accuracy as can be suggested. Lord <NAME>'s test, that where money is spent for an enduring benefit it is capital, seems to leave open doubts as to what is meant by "enduring" ................. (1) (1921) 12 T.C. 266, 282.

(2) [1932] 1 K.B. 124,138.

It seems rather that the cases of <NAME> (1) and of <NAME> v. B. W. Noble, Ltd. (2) and of <NAME> v. Staveley Coal & Iron Co. (3), give illustrations that the test of fixed or circulating capital is the true one; and where, as in this case, the expenditure -is to bring back into the hands of the company a necessary ingredient of their existing business-important, but still ancillary and necessary to the business which they carry-onthe expenditure ought to be debited to the circulating capital rather than to the fixed capital, which is em. ployed in and sunk in the permanent-even if wasting -assets of the business." This preference of his was reiterated by Lord Hanworth M.R. in <ORG> v. <NAME> (H. M. Inspector of Taxes) "The above cases serve to establish the difficulty of the question rather than to affirm any principle to be applied in all cases. Indeed, in the last case cited, Atherton v. <ORG> <ORG> (5) Lord <NAME> says that a payment 'once and for all'-a test which had been suggested by Lord <NAME> in <ORG>' v. Farmer(1), was not true in all cases, and he found authority for that statement in <NAME> v. Incorporated Council of Law Reporting for England and Wales (7) and the Anglo-Persian case(8 ) already referred to is another. The test of circulating, as contrasted with fixed capital, is as good a test in most cases, to my mind, as can be found ; but that involves the question of fact, was the outlay in the particular case from fixed or circulating capital ?" <NAME> at page 300 pointed out the difficulties in applying this test also.

"Unfortunately, however, it is not always easy to determine whether a particular asset belongs to the one category or the other. It depends in no way upon what may be the nature of the asset in fact or in law. Land may in certain circumstances be circulating (2) [1919] 1 K.B. 25.

(2) (1927] 1 K.B. 719.

(3) (1928] 2 K.B. 405.

(4) (1933) 18 T.C. 280, 298.

(5) (1925) 10 T.C. 155, 192.

(6) (1910) 5 T.C. 529.

(7) [1914] 3 K.B. 674.

(8) [1932] 1 K.B. 124.

capital. A chattel or a chose in action may be fixed capital. The determining factor must be the nature of the trade in which the asset is employed. The land upon which a manufacturer carries on his business is part of his fixed capital. The land with which a dealer in real estate carries on his business is part of his circulating capital. The machinery with which a manufacturer makes the articles that he sells is part of his fixed capital. The machinery that a dealer in machinery buys and sells is part of his circulating capital, as is the coal that a coal merchant buys and sells in the course of his trade. So, too, is the coal that a manufacturer of gas buys and from which he extracts his gas. "

In <ORG> v. <NAME> (H. M. Inspector of Taxes)(1), Lord <NAME> however veered round to Viscount Cave's test and expressed his disapproval of the test of fixed and circulating capital. He reviewed the various authorities and stated :

" My Lords, if the numerous decisions are examined and classified, they will be found to exhibit a satisfactory measure of consistency with Lord <NAME>'s principle of discrimination. "

As regards the test of fixed and circulating capital he observed, at page 432 :-

" I have not overlooked the criterion afforded by the economists' differentiation between fixed and circulating capital which Lord <NAME> invoked in <NAME> v. Moore(1), and on which <ORG> relied in the present case, but I confess that I have not found it very helpful. "

<ORG> Tata Hydro-Electric Agencies, Limited, Bombay v. Commissioner of Income-tax, Bombay Presidency and Aden(1), pronounced at page 226:-

"What is money wholly and exclusively laid out for the purposes of the trade' is a question which must be determined upon the principles of ordinary commercial trading. It is necessary, accordingly, to attend (1) (1935) 19 T.C. 390.

(2) (1921) 12 T.C, 266, (3) (1937) L.R, 64 I.A. 215.

to the true nature of the expenditure, and to ask oneself the question, is it a part of the company's working expenses; is it expenditure laid out as part of the process of profit earning ?"

In the case before them they came to the conclusion that the obligation to make the payments was undertaken By the appellants in consideration of their acquisition of the right and opportunity to earn profits, i.e., of the right to conduct the business and not for the purpose of producing profits in the conduct of the business. The distinction was thus made between the acquisition of an income-earning asset and the process of the earning of the income. Expenditure in the acquisition of that asset was capital expenditure and expenditure in the process of the earning of the profits was revenue expenditure. This test really is akin to the one laid down by <NAME> in The City of London Contract Corporation Ltd. v. Style8(1).

<NAME> expressed a similar opinion in <ORG> and <ORG> v. <NAME>), at page 360:- " But in spite of the entirely different forms, material and immaterial, in which it may be expressed, such sources of income contain or consist in what has been called a 'profit- yielding subject," the phrase of Lord <NAME> in <ORG> v. <ORG>). As general conceptions it may not be difficult to distinguish between the profit yielding subject and the process of operating it. In the same way expenditure and outlay upon establishing, replacing and enlarging the profit-yielding subject may in a general way appear to be of a nature entirely different from the continual flow of working expenses which are or ought to be supplied continually out of the returns of revenue. The latter can be considered, estimated and determined only in relation to a period ,or interval of time, the former as at a point of time. For the one concerns the instrument for earning profits (1) (1887) 2 T.C. 239.

(2) (1038) 61 C.L.R. 337.

(3) (1930) S.C. 215, 220.

and the other the continuous process of its use or employment for that purpose.

These are the three criteria adopted for distinguishing capital expenditure from revenue expenditure though it must be said that preponderance of opinion is to be found in support of <NAME> test as laid down in <NAME>'s case(1).

Viscount Cave's test has also been adopted almost universally in India: vide <NAME> & Sons V. Commissioner of Income-tax(2), <CITATION> .(1), <ORG>, Saharanpur v. Commissioner of Income-tax, <ORG>), and <CITATION> .(5). <CITATION> .(3), <NAME> observed, at page 116:-

" The legal touchstone which is almost invariably applied is the familiar dictum of Viscount Cave in <NAME>'s case(1)............ <NAME> felt that this definition had placed the matter beyond all controversy -see remarks in <ORG>'s case(6). But Lord <NAME> in <NAME> case(1), felt that <NAME> had been unduly optimistic and the learned Law Lord was of the opinion that the question whether a particular expenditure fell on one side of the line or other was a task of much refinement. But on the whole I think that the definition of Viscount Cave is a good working definition ; and if one were to supplement it with the definition suggested by Mr. Justice <NAME> in <NAME> v. <ORG>), whether an expenditure had in any way altered the original character of the capital asset, we have a legal principle which can be applied to any set of given facts.

(1) (1925) to T.C. 155.(5) (1952] S.C.R. 11. (2) [1945]14 I.T.R. 66.(6) [1932] 1 K.B. 124. (3) [1946] 15 I.T.R. 105.(7) (1935) 19 T.C. 390. (4) [1949] 18 I.T.R. 13(8) [1942] 10 I.T.R. Suppl. 1, 6.

In <NAME>, In re(1), <ORG> of <ORG> attempted to reconcile all these decisions and deduced the following broad test for distinguishing capital expenditure from revenue expenditure. The opinion of <ORG> was delivered by Mr. Justice <NAME> as he then was, in the terms following:

" It is not easy to define the term 'capital expenditure' in the abstract or to lay down any general and satisfactory test to discriminate between a capital and a revenue expenditure. Nor is it easy to reconcile all the decisions that were cited before us for each case has been decided on its peculiar facts. Some broad principles can, however, be deduced from what the learned Judges have laid down from time to time. They are as follows :-

1. Outlay is deemed to be capital when it is made for the initiation of a business, for extension of a business, or for a substantial replacement of equipment: vide Lord <NAME> in Commissioners of Inland Revenue v. <ORG>). In <ORG> v. Styles(1), at page 243, <NAME> observed as to the capital expenditure as follows :

" You do not use it 'for the purpose of' your concern, which means, for the purpose of carrying on your concern, but you use it to acquire the concern. "

2. Expenditure may be treated as properly attributable to capital when it is made not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade: vide Viscount Cave L.C. in <NAME> v. <ORG> and <ORG>). If what is got rid of by a lump sum payment is an annual business expense chargeable against revenue, the lump sum payment should equally be regarded as a business expense, but if the lump sum payment brings in a capital asset, then that puts the business on another footing altogether. Thus, if labour saving machinery was acquired, the cost of such acquisition cannot be (1) [1946] 15 I.T.R. 185. (3) (1887) 2 T.C. 239. (2) (1927) 13 T.C. 1, 14. (4) (1925) 10 T.C. 155.

deducted out of the profits by claiming that it relieves the annual labour bill, the business has acquired anew asset, that is, machinery.

3.Whether for the purpose of the expenditure, any capital was withdrawn, or, in other words, whether the object of incurring the expenditure was to employ what was taken in as capital of the business. Again, it is to be seen whether the expenditure incurred was part of the fixed capital of the business or part of its circulating capital. Fixed capital is what the owner turns to profit by keeping it in his own possession. Circulating or floating capital is what he makes profit of by parting with it or letting it change masters. Circulating capital is capital which is turned over and in the process of being turned over yields profit or loss. Fixed capital, on the other hand, is not involved directly in that process and remains unaffected by it". This synthesis attempted by <ORG> of <ORG> truly enunciates the principles which emerge from the authorities. In cases where the expenditure is made for the initial outlay or for extension of a business or a substantial replacement of the equipment, there is no doubt that it is capital expenditure. A capital asset of the business is either acquired or extended or substantially replaced and that outlay whatever be its source whether it is drawn from the capital or the income of the concern is certainly in the nature of capital expenditure. The question however arises for consideration where expenditure is incurred while the business is going on and is not incurred either for extension of the business or for the substantial replacement of its equipment. Such expenditure can be looked at either from the point of view of what is acquired or from the point of view of what is the source from which the expenditure is incurred. If the expenditure is made for acquiring or bringing into existence an. asset or advantage for the enduring benefit of the business it is properly attributable to capital and is of the nature of capital expenditure. If on the other hand it is made not for the purpose of bringing into existence any such asset or advantage but for running the business or working it with a view to produce the profits it is a revenue expenditure. If any such asset or advantage for the enduring benefit of the business is thus acquired or brought into existence it would be immaterial whether the source of the payment was the capital or the income of the concern or whether the payment was made once and for all or was made periodically. The aim and object of the expenditure would determine the character of the expenditure whether it is a capital expenditure or a revenue expenditure. The source or the manner of the payment would then be of no consequence. It is only in those cases where this test is of no avail that one may go to the test of fixed or circulating capital and consider whether the expenditure incurred was part of the fixed capital of the business or part of its circulating capital. If it was part of the fixed capital of the business it would be of the nature of capital expenditure and if it was part of its circulating capital it would be of the nature of revenue expenditure. These tests are thus mutually exclusive and have to be applied to the facts of each particular case in the manner above indicated. It has been rightly observed that in the great diversity of human affairs and the complicated nature of business operations it is difficult to lay down a test which would apply to all situations. One has therefore got to apply these criteria, one after the other from the business point of view and come to the conclusion whether on a fair appreciation of the whole situation the expenditure incurred in a particular case is of the nature of capital expenditure or revenue expenditure in which latter event only it would be a deductible allowance under section 10(2) (xv) of the Income- tax Act. The question has all along been considered to be a question of fact to be determined by the Income-tax authorities on an application of the broad principles laid down above and the courts of law would not ordinarily interfere with such findings of fact if they have been arrived at on a proper application of those principles. The expression "once and for all" used by Lord <NAME> has created some difficulty and it has been contended that where the payment is not in a lump sum but in instalments it cannot satisfy the test. Whether a payment be in a lump sum or by instalments, what has got to be looked to is the character of the payment. A lump sum payment can as well be made for liquidating certain recurring claims which are clearly of a revenue nature, and on the other hand payment for purchasing a concern which is prima facie an expenditure of a capital nature may as well be spread over a number of years and yet retain its character as a capital expenditure. (Per <NAME> in <CITATION> .(1). The character of the payment can be deter- mined by looking at what is the true nature of the asset which has been acquired and not by the fact whether it is a payment in a lump sum or by instalments. As was otherwise put by Lord Greene M.R. in <CITATION> .(2):

"The thing that is paid for is of a permanent quality although its permanence, being conditioned by the length of the term, is shortlived. A payment of this character appears to me to fall into the same class as the payment of a premium on the grant of a lease, which is admittedly not deductible".

The case of <ORG>, Bombay v. Commissioner of Income-tax, <ORG> and Aden(3) affords another illustration of this principle. It was observed there:-

"If the purchaser of a business undertakes to the vendor as one of the terms of the purchase that he will pay a sum annually to a third party, irrespective of whether the business yields any profits or not, it would be difficult to say that the annual payments were made solely for the purpose of earning the profits of the business". (1) [1949] 171.T.R. 3I7. 329.

(3) (193 7) L. R. 64 1, A 215.

(2) [1942] 2 K.B. 184.

The expression "once and for all" is used to denote an expenditure which is made once and for all for procuring an enduring benefit to the business as distinguished from a recurring expenditure in the nature of operational expenses. The expression "enduring benefit" also has been judicially interpreted. <NAME> in <ORG> v. Dale(1) agreed with <ORG> that by enduring benefit is meant enduring in the way that fixed capital endures:

"An expenditure on acquiring floating capital is not made with a view to acquiring an enduring asset. It is made with a view to acquiring an asset that may be turned over in the course of trade at a comparatively early date". <NAME> observed in <ORG> & <ORG> v. Federal Commissioner of Taxation(2): "When the words 'permanent' or 'enduring' are used in this connection it is not meant that the advantage which -will be obtained will last for ever. The distinction which is drawn is that between more or less recurrent expenses involved in running a business and an expenditure for the benefit of the business as a whole e.g -"enlargement of the goodwill of a company permanent improvement in the material or immaterial assets of the concern".

To the same effect are the observations of Lord Greene M. R. in <CITATION> . (3 ) above referred to.

These are the principles which have to be applied in order to determine whether in the present case the expenditure incurred by the company was capital expenditure or revenue expenditure. Under clause 4 of the deed the lessors undertook not to grant any lease, permit or prospecting license regarding limestone to any other party in respect of the group of quarries called the Durgasil area without a condition therein that no limestone shall be used for the manufacture of (1) (1932] 1 K.B. 124, 146.

(2) (1938) 61 C.L.R. 337, 355.

(3) (1942) 24 T.C. 453.

cement. The consideration of Rs. 5,000 per annum was to be paid by the company to the lessor during the whole period of the lease and this advantage or benefit was to enure for the whole period of the lease. It was an enduring benefit for the benefit of the whole of the business of the company and came well within the test laid down by Viscount <NAME>. It was not a lump sum payment but was spread over the whole period of the lease and it could be urged that it was a recurring payment. The fact however that it was a recurring payment was immaterial, because one bad got to look to the nature of the payment which in its turn was determined by the nature of the asset which the company had acquired. The asset which the company had acquired in consideration of this recurring payment was in the nature of a capital asset, the right to carry on its business unfettered by any competition from outsiders within the area. It was a protection acquired by the company for its business as a whole. It was not a part of the working expenses of the business but went to appreciate the whole of the capital asset and make it more profit yielding. The expenditure made by the company in acquiring this advantage which was certainly an enduring advantage was thus of the nature of capital expenditure and was not an allowable deduction under section 10(2)(xv) of the Income-tax Act.

The further protection fee which was paid by the company to the lessor under clause 5 of the deed was also of a similar nature. It was no doubt spread over a period of 5 years, but the advantage which the company got as a result of the payment was to enure for its benefit for the whole of the period of the lease unless determined in the manner provided in the last part of the clause. It provided protection to the company against all competitors in the whole of the Khasi and Jaintia Hills District and the capital asset which the company acquired under the lease was thereby appreciated to a considerable extent. The sum of Rs. 35,000 agreed to be paid by the company to the lessor for the period of 5 years was not a revenue expenditure which was made by the company for working the capital asset which it had acquired. It was no part of the working or operational expenses of the company. It was an expenditure made for the purpose of acquiring an appreciated capital asset which would no doubt by reason of the undertaking given by the lessor make the capital asset more profit yielding. The period of 5 years over which the payments were spread did not make any difference to the nature of the acquisition. It was none the less an acquisition of an advantage of an enduring nature which enured for the benefit of the whole of the business for the full period of the lease unless terminated by the lessor by notice as prescribed in the last part of the clause. This again was the acquisition of an asset or advantage of an enduring nature for the whole of the business and was of the nature of capital expenditure and thus was not an allowable deduction under section 10(2)(xv) of the Act. We are therefore of the opinion that the conclusion reached by the Income-tax authorities as well as <ORG> in regard to the nature of the payments was correct and the sums of Rs. 40,000 paid by the company to the lessors during the accounting years 1944-45 and 1945-46 were not allowable deductions under section 10(2)(xv) of the Act. The appeal therefore fails and must be dismissed with costs. Appeal dismissed.


JUDGMENT <NAME>, J.

1. This appeal is directed against the order passed by learned Single Judge of <ORG> at Bangalore whereby Learned Single Judge has set aside the order and decree passed by the Additional Civil Judge, <NAME> in O.S. No. 160 of 1988 whereby learned trial court decreed the suit relating to family property i.e. Schedule -B, II, item No. 2 T.M. C. No. (Old 1846A, New 2178 (House)), III, Item -1 M.H. No. 202/235 Hindwadi Belgaum, item 2 M.H. No. 687/1 (Raviwar Peth), Item -4 C.T.S. No. 1551 (open space) (Hindwadi). The plaintiff also filed a cross-objection with reference to three business mentioned in IV (Schedule-B) namely <ORG>, <ORG> and <ORG>. The decree in respect of these companies has been granted and these companies have been held to be partnership concerned. So far as item -1 in VI Schedule, namely goods truck bearing No. MEI 7567, separate regular first appeal being RFA No. 428 of 1993 was filed and the same has been disposed of with which we are not concerned.

The real dispute between the parties is whether the properties for which a decree was passed by the trial court was joint Hindu family property or those were self-acquired property of the defendants and their children.

2. The case of the plaintiff- Appasaheb was that all the properties mentioned above were the joint family properties and therefore, he sought partition of the said properties. The following properties formed part of Schedule B which read as under.

SCHEDULE-'B'

(i) Agricultural lands situated within the village limits of Sadalaga, Taluka Chikodi.

_________________________________________________________________ Sl. No. Sy. No. Area A-Gs Assessment Value Rs. Ps. Rs. _________________________________________________________________ 1. 893/3 10-10 40-08 1,00,000-00 2. 72/2 1-00 7-00 10,000-00 3. 52/2 0-30 6-00 7,500-00 4. 73/3 8-30 Out of this 11-30 20,000-00 2-07 45-23 _________________________________________________________________ (II) The joint Hindu family house properties situated at Sadalaga Taluka Chikodi. _____________________________________________________________________ Sl. TMC No. Value No _____________________________________________________________________ 1. Old 1736 (<ORG>) New 2036 Rs. 25,000-00 2. Old 1846A New 2178 (<ORG>) Rs. 30,000-00 3. 3130/2 (Open <ORG>) Rs. 10,000-00 4. 1986= 1644( <ORG>) Rs. 8,000-00 5. 1923=1660 (<ORG>) Rs. 9,000-00 6. 1367 = 1193 (<ORG>) Rs. 10,000-00 7. 1935 = 1669(<ORG>) Rs. 5,000-00 _____________________________________________________________________ (III) Properties situated at Belgaum 1. M.H. No. 203/235 Hindwadi-Belgaum Rs. 2,00,000-00 2. M.H. No. 687/1, Ravivarpeth Rs. 1,00,000-00 3. M.H. No. 764/8A (Angol Mal) Rs. 1,50,000-00 4. M.H. No. CTS No. 1551 Open Space Hindwadi, Belgaum Rs. 30,000-00 (IV) The suit undivided Hindu family business at Belgaum 1. <ORG>, firm in the Shop No. 843 in Raviwarpeth, including Capital goods and turnover Rs. 1000-00 2. <ORG> in Shop No. 677 firm Rs. 1000-00 3. <ORG> in the name of <ORG>, Ravivarpeth, Belgaum Rs. 1000-00 (V) The suit undivided Hindu family business at Sadalaga, Taluk Chikodi, Dist. Belgaum 1. <ORG> Rs. 1000-00 2. <ORG> in the name and style C.S. <NAME> Rs. 1000-00 (VI) The suit undivided Hindu family movables: 1. Goods truck bearing Reg. No. MEI 7567 Rs. 1,00,000-00 2. A car bearing Reg. No. MHH 30 Rs. 60,000-00 3. Scooter bearing Reg. No. CTL 3597 Rs. 12,000-00 4. Hero Honda Reg. No. CTS 7069 Rs. 15,000-00 5. Ambassador Car bearing No. MZH 9453 Rs. 50,000-00 6. Ambassador Car bearing No. 4334 Rs. 50,000-00 (VII) Share and Bank accounts. 1. Two shares each worth Rs. 1000/- in Panchaganga Sugar Factory Ichalkaranji Rs. 2,000-00 2. One share in <ORG> worth Rs. 1000/- Rs. 1,000-00 3. Amount in Account No. in <ORG>, Br. Raviwarpeth Belgaum Rs. 1,000-00 4. Amount in Account No. in <ORG> branch Maruti galli, Belgaum Rs. 1,000-00 5. Amount in Account No. Ratnakar Bank Branch, Belgaum Rs. 1,000-00 (VIII) The family movables including the cooking apparatuses and utensils etc. in Belgaum and at Sadalaga family house Rs. 10,000-00 (IX) (i) Four she-buffaloes Rs. 6,000-00 (ii) Two bullocks Rs. 2,000-00 (iii) Bullock card and Agricultural implements Rs. 1,000-00 (iv) Motor pump set and pipeline Rs. 10,000-00.

The suit was contested by the defendants and they claimed that the properties mentioned in the suit Schedule are self-acquired properties and therefore, there was no question of partition. The trial court however, decreed the suit of the plaintiff as mentioned above. Aggrieved against that order the defendants filed an appeal and in the said appeal <ORG> reversed the finding of the trial court and dismissed the suit.

3. In order to appreciate the controversy between the parties, it may be appropriate to reproduce the genealogy. The genealogy of the whole family is as under:

PEERAPPA (1975) | <NAME> (1965) | ________________________________________________________________________________________ TAVANAPPA GANGUBAI SATUBAI BALAPPA DEVENDRA BABURAO ANNAPPA AKKAPPA APPASAHEB (D-4) (D-5) (D-8) (GONE IN (D-1) (D-9) (D-10) (D-11) (PLFF.) | ADOPTION) | SUBBARAO [DIED=1944] INDUBAI | (D-2) | | ___________________________________ | INDUBAI SRIKANTA @ CHANDRAKANTA | SHASHIKANTH | (D-2) (D6) (D-7) | | ___________________________________________ <NAME> (D-3) The propositus of the said family was one <NAME>. He died in the year 1975 and his wife <NAME> predeceased him in the year 1965. The plaintiff and defendant Nos. 1,4,9 & 10 are sons and defendant Nos. 5, 7 & 11 are the daughters of <NAME>. Defendant No. 2 is the daughter and defendant Nos. 6 & 7 are the sons of defendant No. 5. Defendant Nos. 1 & 2 are the husband and wife and Defendant No. 3 is their son. Another son of <NAME> by name <NAME> has gone in adoption outside the joint family. The plaintiff and Defendant Nos. 1, 4, 9 & 10 formed co-parcenary along with their deceased father. The co-parcenary family as well as the family properties given in Schedule B are said to be still undivided. The landed properties of the suit family is described in Item Nos. 1 to 4 of Schedule B (I). The house and open space described at SI. No. 1 of (II) of the B Schedule are the ancestral properties of the joint family. The property at SI. No. 2 of Schedule B(II) was purchased in the name of Defendant No. 5- <NAME> out of the joint family funds on or about 1964-65 which was an open space and subsequently it was got transferred in the name of Defendant No. 2 after constructing RCC building thereon out of the joint family funds. In this building the plaintiff is running joint family shop in the name and style of "<ORG>" in the southern portion and in the northern portion has been leased out to <ORG> at Sadalaga. The property at Sl. No. 3- of Schedule B (II) was purchased in the name of Defendant No. 7 in the year 1984-85. Similarly, the suit properties at Sl. Nos. 4 to 7 of Schedule B (II) were purchased in the name of Defendant No. 9 for the benefit of the said undivided family. The properties mentioned in SL No. (III) of Schedule B were purchased and acquired at <NAME> out of the joint family funds for joint family business described in Sl. No. (IV) of the B Schedule. Item No. (i) in Schedule B (III) was purchased in the name of Defendant No. 1 and RCC double storeyed building was constructed for the purpose of joint family out of the joint family funds. Item No. 2 of Schedule B(III) was acquired in the name of Defendant No. 3 out of the joint family funds. Item No. 4 of Schedule B (III) was purchased in the name of Defendant No. 2 for the joint family. Out of the joint family funds Item No. 3 of Schedule B (III) was purchased in the name of Defendant No. 6 along with some other properties. The joint family during the life time of <NAME> started <ORG> business shop at Sadalaga in the year 1946 out of the joint family funds from various properties. The said business prospered and gave good profit within a short period. Defendant No. 1 during that period acquired experience in business and trade the family thought it better to expand the family business and seek fortune in addition to agriculture and kirana business in larger business centers. In the year 1960 a business shop was started for dealing in bhusari, oil and sugar by investing huge amount out of the joint family in the name of 'D.P. Chandgade' in Chikodi town, the taluka place. That was kept upto 1967 and Chikodi was felt a small place and as such all the brothers and their father intended to shift the business to the vast business center. So the entire business was shifted to <NAME> in 1967 and established the business in Raviwar Peth, <NAME>. The <ORG> shop at Sadalaga was looked after by the plaintiff along with defendant No. 9 and defendant No. 6 upto 1967-68. The plaintiff then went to <NAME> along with Defendant No. 1 in the year 1967. The business at <NAME> also prospered. The kirana shop at Sadalaga was being looked after by Defendant Nos. 6 & 9 up to 1974. As the business at <NAME> prospered being expanded, in the year 1976 a partnership business was floated in the name of "<ORG>" and thereafter, another partnership business in the name and style of "<ORG> was started by the plaintiff and defendant No. 1. In the year 1967-68 another tobacoo company in the name and style of "<ORG> was managed by Defendant No. 9 along with kirana shop with defendant No. 7. The business further expanded and then the son of Defendant No. 1 namely Defendant No. 3 became an adult and therefore, he entered into business and then the business further expanded. As the family business expanded, Defendant Nos. 1 & 2 wanted to corner the entire business including the interests of other defendants. Therefore, the plaintiff thought that it would not be proper to continue in a joint family business and demanded partition and separate possession and share in the family business and also demanded rendition of accounts of the family business. The defendant No. 1 in collusion with defendant Nos. 2 to 11 avoided to have partition on some pretext or the other. Therefore, ultimately, no option was left to the plaintiff except to file a suit for partition and separate possession and taking accounts of the family business. Since the plaintiff's father <NAME> died after the Hindu Succession Act , 1956 came into force, therefore, the male and female both heirs of the deceased <NAME> were entitled to their share and accordingly, the plaintiff claimed that he has 9/48th share. The defendant No. 1 being a shrewd businessman and expert in trade, though he was not the eldest member of the family, with the consent of all other members of the family managed the family as the manager of the joint family after the death of the father. Hence the present suit was filed along with the following prayers:

The plaintiff therefore prays that:

(A) A decree for partition by metes and bounds be passed by determining and awarding to plaintiff his 9/48th share in all the suit Schedule 'B' properties.

(B) A decree for separate possession of the plaintiff's 9/48th share be passed directing the defendant No. 1 or responsible defendants to put the plaintiff in separate possession of his share.

(C) Accounts of the trade and business described in plaint Schedule 'B' (IV), B (V) and B(VII) taken and the plaintiff's 9/48th share in the profit to be determined and awarded to the plaintiff.

(D) Future mesne profits be awarded to the plaintiff.

(E) That the costs of the suit be awarded to the plaintiff.

4. The suit was contested by the defendants and the allegations were denied that the family still continues to be undivided Hindu family. It was alleged that the co-parcenary family of defendant No. 1 consists of the plaintiff and defendant Nos. 1,4,9 and 10 and holds the family properties under 'B' Schedule till today as undivided properties. The defendants also denied that the family holds agricultural lands as described in Schedule 'B' (I). It was also pointed out that <NAME> much earlier to the deed of memo of partition dated 19.5.1965 pertaining to the permanent tenancy right over 1/8th share in the lands at Sl. No. 52/3 measuring 6 acres 31 gunthas, Sl. No. 72/2 measuring 6 acres and 5 gunthas, Sl. No. 73/3 measuring 8 acres 30 gunthas at Sadalaga had effected partition and separation under the power of father by relinquishing his right, title and interest amongst his sons alone by allotting to his separated sons and estate of coparcenary in due course and the sons possessed and enjoyed separately, got the occupancy rights over these agricultural lands under the Karnataka Land Reforms Act. The assertion that the family owns house and open scape described in Schedule 'B' (II) is false. The allegations that the family owns ancestral house at Sadalaga was also denied. It was submitted that during the life time of <NAME>, partition was effected and each son was allotted his portion of share and this partition took place under the authority of <NAME> and much earlier to the deed of memo of partition dated 19.5.1965 and the father also relinquished his right, title and interest in the house in favour of his sons. It was also submitted that the allegations that the family purchased a house in the name of Defendant No. 5- Gangubai out of the joint family funds in or about 1964-65 and the family constructed RCC building for the joint family with the joint family funds and subsequently the property got transferred in the name of defendant No. 2 were false and frivolous. That the property bearing No. 1946 (New No. 2178) at Sadalga is exclusively absolute separate individual property of defendant No. 5. But now the property bearing old No. 1846A bearing new No. 2178 of Sadalga is absolutely separate individual property of defendant No. 2. The allegation of joint family shop in the name and style of "<ORG> and a portion of that building being given to <ORG> at Sadalaga as claimed by the plaintiff was also denied and the claim that "<ORG> being joint family property was also denied. It was pointed out that the property belonged to Defendant No. 2 and Defendant No. 2 has leased out a portion to the <ORG> and there is execution proceedings against the <ORG>. Other allegations at various paragraphs of the plaint were all denied.

On the basis of these pleadings the trial court framed originally the following ten issues which read as under.

1. Whether the plaintiff proves that the suit properties are the joint family properties of plaintiff and defendants Nos. 1,4,5,8,9,10 and 11?

2. Whether the defendants prove that there was partition in their family prior to 19/5/1965?

3. Whether the defendants prove that TMC No. Old 1846A and new No. 2178 of Sdalaga was exclusive property of the defendant No. 5 and now it is in the exclusive property of defendant No. 2?

4. Whether the defendants prove that <ORG> No. 3130/2 of Sadalaga is exclusive property of Defendant No. 7?

5. Whether the defendants prove that M.H. No. 202/235 of Belgaum i.e. Schedule B-III(i) is the self-acquired property defendant No. 1?

6. Whether the defendants prove that CTS No. 687/1 of Belgaum is the self-acquired property of defendant No. 3?

7. Whether defendants prove that suit Schedule B-III (a) property is the self acquired property of the defendant No. 2?

8. Whether the plaintiff is entitled for any share?

9. If so, what is his share and in which properties?

10. To what reliefs the parties are entitled? Additional one issue was framed later which reads as under.

11. Whether the plaintiff proves that suit property bearing Municipal H. No. 764/8A-1 situated at Anagol-Mal (Bhagya Nagar) is also ancestral property?

5. The learned trial Judge affirmed issue No. 1 partly and also answered No. 4 in favour of the plaintiff. The trial Judge also answered issue No. 8 in favour of the plaintiff and granted a decree as aforesaid. The trial court held that the acquisition of the property was from the joint family nucleus which was available with the joint family propitious, all the parties i.e. defendant Nos. 5, 8 and 11 and the sons i.e. defendants Nos. 1,4,9 and 10 and the plaintiff were to share equally and as per principle it was incumbent on the part of defendant Nos. 1 to 3 to prove specifically that it was on account of self-acquired properties came to be purchased. Learned trial Judge further held that there is absolutely no evidence to support the plea of defendant Nos. 1 to 3 and further held that the suit property acquired vide Ex.D 46 bearing TMC Old No. 1846A and new No. 2178 standing in the name of. Defendant No. 2 the suit property purchased vide Ex.D 48 dated 28.6.1971 standing in the name of Defendant No. 1; the suit property Ex. D.49 dated 24.2.1983 standing in the name of Defendant No. 3 and the suit property vide Ex.50 dated 11.8.1975 standing in the name of Defendant No. 2 are joint family acquisition wherein plaintiff and Defendant No. 9 as co-parceners can seek partition of their specific share in them. It may not be out of place to mention here that Defendant No. 1 is the brother of the plaintiff, defendant No. 2 is the wife of defendant No. 1 while defendant No. 3 is the son of defendant Nos. 1 & 2. Ultimately the trial Judge concluded as follows:

Consequently, each of the plaintiff and the defendant No. 9 is entitled to 3/16th share in the suit properties at Sl. Nos. 1 to 4 shown in para (I), and <ORG> and 2 and 4 to 7 shown in para (II), and st Sl. Nos. 1,2 and 4 shown in para (III), and at Sl. Nos. 1 to 4 shown in para (VI) of the suit Schedule 'B' The net result is the plaintiff and Defendant No 9 were given 3/16th share by partition metes and bounds. Aggrieved against this judgment and decree the defendant Nos. 1 to 3 preferred an appeal before <ORG>. In the present appeal we are only concerned with the respondent Nos. 1 to 3 who were the appellants before <ORG> who felt aggrieved by the order of the trial court. On appreciation of evidence <ORG> observed that in the present appeal <ORG> was only concerned with Issue Nos. 3,5,6 & 7 and the grievance of the appellants before <ORG> was that all the properties mentioned in those issues were self-acquired properties of <NAME>, his wife and son and those properties were not purchased from the family nucleus. <ORG> on appreciation of evidence set aside the order of the trial court so far as the appellants before it (i.e. Defendant Nos. 1 to 3) were concerned and dismissed the suit qua them. Hence the present appeal.

6. We have gone through the records and heard learned Counsel for the parties at length. So far the legal proposition is concerned, there is no gain saying that whenever a suit for partition and determination of share and possession thereof is filed, then the initial burden is on the plaintiff to show that the entire property was a joint Hindu family property and after initial discharge of the burden, it shifts on the defendants to show that the property claimed by them was not purchased out of the joint family nucleus and it was purchased independent of them. This settled proposition emerges from various decisions of this Court right from 1954 onwards.

7. In the case of <CITATION> . , their Lordships held that proof of the existence of a joint family does not lead to the presumption that property held by any member of the family is joint, and the burden rests upon anyone asserting that any item of property was joint to establish the fact. But where it is established that the family possessed some joint property which from its nature and relative value may have formed the nucleus from which the property in question may have been acquired, the burden shifts to the party alleging self-acquisition to establish affirmatively that the property was acquired without the aid of the joint family property. Therefore, so far as the proposition of law is concerned, the initial burden is on the person who claims that it was joint family property but after initial discharge of the burden, it shifts to the party who claims that the property has been purchased by him through his own source and not from the joint family nucleus. Same proposition has been followed in the case of Mst. <CITATION> . wherein it was observed as follows:

There is a presumption in Hindu Law that a family is joint. There can be a division in status among the members of a joint Hindu family by definement of shares which is technically called "division of status", or an actual division among them by allotment of specific property to each one of them which is described as "division by metes and bounds". A member need not receive any share in the joint estate but may renounce his interest therein; his renunciation merely extinguishes his interest in the estate but does not affect that status of the remaining members vis-a-vis the family property. A division in status can be effected by an unambiguous declaration to become divided from the others and that intention can be expressed by any process. Though prima facie a document clearly expressing the intention to divide brings about a division in status, it is open to a party to prove that the said document was a sham or a nominal one not intended to be acted upon but was conceived and executed for an ulterior purpose. But there is no presumption that any property, whether moveable or immoveable, held by a member of a joint Hindu family, is joint family property. The burden lies upon the person who asserts that a particular property is joint family property to establish that fact. But if he proves that there was sufficient joint family nucleus from and out of which the said property could have been acquired, the burden shifts to the member of the family setting up the claim that it is his personal property to establish that the said property has been acquired without any assistance from the joint family property.

Similarly, in the case of <CITATION> . , their Lordships held as follows:

Under Hindu law, when a property stands in the name of a member of a joint family, it is incumbent upon those asserting that it is a joint family property to establish it. When it is proved or admitted that a family possessed sufficient nucleus with the aid of which the member might have made the acquisition, the law raises a presumption that it is a joint family property and the onus is shifted to the individual member to establish that the property was acquired by him without the aid of the said nucleus. This is a well settled proposition of law.

Similarly, in the case of <CITATION> . , their Lordships have held that the character of any joint family property does not change with the severance of the status of the joint family and a joint family property continues to retain its joint family character so long as the joint family property is in existence and is not partitioned amongst the co-sharers. By a unilateral act it is not open to any member of the joint family to convert any joint family property into his personal property.

8. In the case of <CITATION> (dead) through LRs and Anr. their Lordships held as follows:

It is no doubt true that there is no presumption that a family because it is joint possessed joint property and therefore the person alleging the property to be joint has to establish that the family was possessed of some property with the income of which the property could have been acquired. But such a presumption is a presumption of fact which can be rebutted/ But where it is established or admitted that the family which possessed joint property which from its nature and relative value may have formed sufficient nucleus from which the property in question may have been acquired, the presumption arises that it was the joint property and the burden shifts to the party alleging self-acquisition to establish affirmatively that the property was acquired without the aid of the joint family.

Therefore, on survey of the aforesaid decisions what emerges is that there is no presumption of a joint Hindu family but on the evidence if it is established that the property was joint Hindu family property and the other properties were acquired out of that nucleus, if the initial burden is discharged by the person who claims joint Hindu family, then the burden shifts to the party alleging self-acquisition to establish affirmatively that the property was acquired without the aid of the joint family property by cogent and necessary evidence.

9. In this legal background, we have to examine what exactly has been proved in the present case. As per the finding given by the trial court there is no two opinion that <NAME> was the main person who held various agricultural lands and out of that certain business started. But the case of the defendant Nos. 1 to 3 was that the properties acquired by them were out of their own earnings and not out of the joint family nucleus. The trial court has found that no evidence has been produced by the defendants to substantiate that Defendant Nos. 2 & 3 i.e. wife and son of Defendant No. 1 had individual source to purchase the aforesaid properties. Therefore, the learned trial Judge has held against them. But <ORG> has reversed that finding. We fail to see any justifiable reason for <ORG> to have taken a contrary view in the matter. The trial court in extensive manner dealt with each subject and came to the conclusion that the properties acquired by defendant Nos. 1 to 3 were not self-acquired properties as neither defendant No. 2 nor Defendant No. 3 i.e. the mother and son had any independent source of income for purchasing these properties. The defendant Nos. 1 to 3 had not been able to establish from evidence that they had sufficient funds out of which such properties could be purchased. The trial court in paragraph 69 of its judgment has definitely held against them. But <ORG> has observed that the finding in paragraph 69 of the judgment is vague. With great respect, we do not subscribe the view taken by <ORG>. The finding of trial court is categorical & clear it was observed in paragraph 69 of its judgment which is reproduced below:

... it was incumbent on the part of the defendant Nos. 1,2 and 3 to prove specifically that it was on account of self acquisition the said properties came to be purchased. Absolutely there is no evidence in this context to support plea of the defts. Nos. 1 to 3. Therefore I am to state that the suit property acquired vide Ex.D 46, bearing new TMC No. 2178 standing in the name of defendant No. 2 and the suit property purchased vide Ex. D 48 dated 28.6.71 standing in the name of the defendant No. 1, and the suit property vide Ex. D 49 dated 24.2.1983 standing in the name of defendant No. 3, and the suit properties vide Ex.D.50 dated 11.8.75 standing in the name of defendant No. 2 are joint family acquisitions wherein the plaintiff and the deft No. 9 as co-parceners can seek partition of their specific share in them.

Thus, the finding arrived at by the trial court appears to us to be categorical finding which cannot be termed to be vague. Therefore, the view taken by the trial court appears to be justified and the finding given by <ORG> is absolutely vague. Hence, we affirm the finding of the trial court and set aside the order of <ORG>.

10. As a result of our above discussion, we are of opinion since the defendants- respondents herein have failed to prove that the properties mentioned in the aforesaid transactions were acquired by them as self-acquired property, the judgment under appeal cannot be sustained. We, therefore, allow this appeal and set aside the order of <ORG> and affirm the order of the trial court. There would be no order as to costs.