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PETITIONER: R. B. SETH MOOLCHAND SUGANCHAND

       Vs.

RESPONDENT: THE COMMISSIONER OF INCOME-TAX, DELHI

DATE OF JUDGMENT19/09/1972

BENCH: REDDY, P. JAGANMOHAN BENCH: REDDY, P. JAGANMOHAN KHANNA, HANS RAJ

CITATION:  1973 AIR   15            1973 SCR  (2) 360  1973 SCC  (3) 257  CITATOR INFO :  D          1991 SC 227  (9,10)

ACT: Income  tax Act (11 of 1922) s. 10 (2) (xv)-Amount paid  for lease  of mica mine already worked and fee  for  prospecting licence-Capital or Revenue expenditure-Tests.

HEADNOTE: The  assessee, a firm carrying on mining business,  took  on lease  for  20  years certain areas which  had  been  worked previously  by. others, and in which mica pillars  had  been exposed by those earlier mining operations.  Mica scrap  was also  lying  on  the surface.  The assessee paid  a  sum  of money, part of which was towards the mica scrap lying on the surface.   The assessee also paid at Re.  1 /- per acre  per year  as fee for prospecting licence., The assessee  claimed the  1/20th part of the money paid for the lease as well  as the  fee paid for the prospecting licence as revenue  expen- diture for purposes of income tax.  The Tribunal allowed the money  paid  for  the mica scrap lying  on  the  surface  as revenue  expenditure, but disallowed the other claims.   The High  Court  also, on reference, held against  the  assessee (appellant). Dismissing the appeal to this Court, HELD  : The expenditure incurred for the lease, as  well  as the fee paid for the prospecting licence, were not allowable as revenue expenditure. [362G-H; 371C] (1)The test for ascertaining whether the amount spent  for the  lease is of a capital nature, is whether it  was  spent for  obtaining a right of an ,enduring character, which,  in the case of mining lease is to acquire rights over land  for winning  the mineral.  In other words, where the mineral  is part  of  the  land and some mining operations  have  to  be performed  to extract it from the earth, the amount paid  to acquire  a right over, or in the land, to win that  mineral, is   of  an  enduring  character,  and  hence,   a   capital expenditure.  But where the mineral has already been  gotten and  is  on the surface, then the expenditure  incurred  for obtaining  the right to acquire the raw material,  that  is, the mineral would be a revenue expenditure laid out for  the acquisition of a stock-in-trade. [365A-B; 368G-H] In the present case, the findings of the Tribunal are  clear

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and  consistent with those given by the  Income-tax  Officer and  the Appellate Assistant Commissioner, in that,  all  of them  distinguished  between  the  raw-materials  which  had already been extracted and brought to the surface, and those that are still to be extracted.  The mica pillars which  had been exposed by the earlier mining operations, had  enhanced the  value of the right which was leased to  the  appellant, but  none  the less, the appellant still had to carry  out some  mining  operations  to extract the  mineral  from  the pillars which were embedded in the land.  The lease was  for a long period and it conferred a right to excavate the mica. The  amount paid was therefore for acquiring a right  of  an enduring nature to extract and remove the mica, to bring  it to the surface, grade it, and pay royalty to the  Government in  accordance  with  the  quality of  each  grade  of  mica extracted.         [368C-D, H; 369A-C; 370B-D] Pingle   Industries  Ltd.  v.  Commissioner  of   Income-tax Hyderabad, 40 I.T.R. 67, followed. 361 Artherten v. British Insulated and Helsby Cables Ltd. [1926] A.C.  205,  213, Kauri Timber Co. Ltd.  v.  Commissioner  of Taxes,  [1913]  A.C. 771, Golden Horse Shoe  (New)  Ltd.  v. Thurgood (H.M. Inspector of Taxes), 18T.C. 280, Abdul  ayoom v.  Commissioner of Income Tax, 64 ITR 689 at 703,  Mohanlal Hargovind  v.  C.I.T.,  17 I.T.R. 473  and  M.A.  Jabbar  v. Commissioner of income Tax, 68 I.T.R. 493, referred to. (2)The  term prospecting licence’ shows that the mine  has not  yet  started  working as a mine.  The  finding  by  the authorities  and  the  Tribunal that the fee  paid  for  the prospecting licence was a payment for initiating the  mining operations was a finding of a fact.  It was, in fact, a  fee paid  irrespective  of  the quantity  of  minerals  obtained showing  that the object of the payment was to initiate  the business.   The period for which the licence  was  obtained, namely  one year, does not also make it a  revenue  payment. The   fee  paid  to  obtain  the  licence  to   carry   out, investigate, search and find the mineral with the object  of conducting the business of extracting ore from the earth, is a fee paid for indicating the business and therefore, is  of a  capital nature and could not be equated to a payment  for the purposes of stock-in-trade. [370D-H; 371A-B]

JUDGMENT: CIVIL   APPELLATE   JURISDICTION:  C.   A.   No.   2020   of 1972. Appeal  by  certificate from the judgment  and  order  dated March  28,  1968 of the Rajasthan High Court at  Jodhpur  in Income-tax’ Reference No. 1 1 of 1963. N.   D. Karkhanis and A. G. Ratnaparkhi, for the appellant. S.   C.  Manchanda,  P.  L. Juneja, S. P. Nayar  and  R.  N. Sachthey, for the respondent. The Judgment of the Court was delivered by JAGANMOHAN  REDDY,  J.   This appeal  is  by  special  leave against the judgment of the High Court of Rajasthan in I  an income-tax reference under s., 66 (1 ) by which it  answered the  two questions referred to it in the  negative.   Before this  appeal was filed, Appeal No. 1238/1969 had been  filed on a certificate but that is dismissed without costs because this  Court  had in several cases’ held that  in  Income-tax references if the High Court does not give any reasons while granting the certificate, the certificate can be revoked. The assessee, a firm carrying on mining business at  Udaipur with  a branch at Mandal, had pursuant to an invitation  to

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tender  for  mica mining in accordance with  the  terms  and conditions  prescribed  in  the  Mineral  Concession  Rules, tendered  for certain areas for Rs. 1,57,150/- of which  Rs. 3,360/-  was  payable towards the mica scrap  lying  on  the surface.   The  lease was for 20 years and the  areas  which were offered had been worked by other Private companies  for 15 years.  This offer of the appellant was accepted and  the lease  was granted to it.  In the relevant  assessment  year 1952-53  for  which the previous year for  the  head  office ended on October 30, 1951 and for the branch ended 362 on  March 30, 1952, the appellant claimed Rs. 7,857/-  being the  1/20th  of  the tender  money  as  revenue  expenditure incurred  during that year.  The claim of the  assessee  was rejected  by the Income-tax Officer on the ground  that  the money  was  paid  for the value of the  land  which  it  had acquired  because  the  mine granted  to  the  assessee  had already been worked by the private companies.  In an  appeal against  this  order, the Appellate  Assistant  Commissioner confirmed  the  disallowance of the expenditure  as  in  his view,  it was a capital nature expended for the  acquisition of  a,  capital asset.  Against this order,  an  appeal  was filed  to  the  Appellate Tribunal.   The  Tribunal  however allowed  Rs. 3,360/paid for mica scrap lying on the  surface as  a  revenue expenditure incurred in  the  acquisition  of stock-in-trade, but disallowed the claim for the balance  of Rs. 1,53,800/- which was paid under the tender as a  capital expenditure. The  assessee had also claimed Rs. 3,200 as the fee paid  by it a the rate of Re.  1/- per acre per year for  prospecting licence.   The  income-tax Officer  disallowed  this  amount under  s.  10(2)  (xv) of the Indian  Income-tax  Act,  1922 (hereinafter  called  the  ’Act’) on  the  ground  that  the licence  was obtained by the assessee only that  year,  that the  fee was paid in addition to the royalty payable on  the value of the emeralds excavated and sold and that it was  an initial expenditure for procuring a right to respect  mines. The  Appellate  Assistant Commissioner in an appeal  by  the assessee  negatived the claim on the ground that under  that licence  the  assessee had a right to win  and  commercially exploit  the  minerals which the assessee  actually  carried out.  The Tribunal while dismissing the appeal filed against the  order of the Appellate Assistant Commissioner  observed that  the  prospecting licence fee cannot be  equated  to  a payment made for the purchase of stock-in-trade, that it was not  based, on any quantity of minerals, that  the  minerals had  to  be won and extracted from the earth  and  the  term "prospecting  licence"  shows  that the  mine  had  not  yet started  working  as  a mine and that  the  payment  was  to initiate the business.-It also held that the period of on,-- year  for which the licence was obtained cannot justify  the fee paid as a revenue expenditure.  The assessee  thereafter filed’  application under s. 66(1) of the Act and as in  its opinion a question of law did arise, the, Tribunal  referred the  following  two  questions to the  High  Court  for  its opinion :- 1.   Whether  on the facts and in the circumstances  of  the case, the prospecting licence fee of Rs. 3,200/is  allowable as revenue expenditure ? 2.   Whether  on the facts and in the circumstances  of  the caste  the appropriate Part of Rs. 1,53,800/- was  allowable as revenue expenditure ? 363 Taking the second question first, it is contended before  us by   the  learned  advocate  for  the  appellant  that   Rs.

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1,53,800/-  paid  for pillars of mica standing in  the  land leased  out after the other private companies had worked  it was a revenue expenditure because the tender which was given and  accepted  was on the basis of the calculations  in  the Indian  Mining Hand Book for a specific quantity of mica  in the  mines  which  was the  assessee’s  stock-intrade.   The revenue  however submits that the amount of the lease was  a capital outlay incurred for the initiation of the  business, and that the pillars of mica cannot be stock-in-trade unless the mica was excavated, and brought to the surface.  A large number  of  cases decided in this country  and  in  England, dealing  with different topics were referred  and  arguments addressed before us dealing with many analogies of one  kind or  other, tendu leaves mangoes, apples,  sand,  brickearth, lime and other commodities all with a view to persuade us to ascertain  what  is  the  true test to  be  applied  to  the particular facts of this case’ We do not however propose  to refer to cases dealing with variety of topics except perhaps to determine the nature of the expenditure incurred in  this case by the assessee. This  Court  in Pingle Industries Ltd.  v.  Commissioner  of Income-tax,    Hyderabad(1)   had   occasion   to    examine exhaustively  the  relevant  Indian and  English  cases  for determining  what  is a capital expenditure and what is  a revenue  expenditure.  That was also a case of mining  where the assessee obtained leases for excavating Shahabad  stones for a period of 12 years for which an annual payment of  Rs. 28,000 was agreed upon.  The majority of Judges, Kapur,  J. and  Hidayatullah,  J.  (as he then was)  (S.   K.  Das,  J. dissenting) held that the assessee acquired by his long term lease the right to win stones, that the stones in situ  were not  its  stock-in-trade in a business sense but  a  capital asset  from which after extraction it converted  the  stones into its stock-in-trade.  It was also held that the  payment was  neither  rent  nor  royalty  but  a  lump  payment   in instalments  for  acquiring  a  capital  asset  of  enduring benefit  to  its  trade; the amounts  being  out  goings  on capital  account, were therefore not  allowable  deductions. The  proposition  as qualified by Lord Cave in  Atherton  v. British  insulated  and Helsby Cables. Ltd.(2) that  in  the absence   of  any  special  circumstances  leading  to   the ’opposite conclusion, when an expenditure is made, not  only once  and  for  all, but with a view  to  bringing  it  into existence an asset or advantage for the enduring benefit  of a trade, has been applied, explained and varied from time to time  as the circumstances of the particular case  required. The application of these principles to the various cases and the conclusions reached by courts in those cases often (1) 40 I.T.R. 67.                  (2) [1926] A. C. 205,213. 6-L498Sup CI/73 364 lead  to irreconciliable results.  It is because  the  topic itself is a troublesome one and is not rendered any the less difficult  by  resorting to principles.  "It is  not  always easy" observed Romer, L.J. in (;olden Horse Shoe (New)  Ltd. v.  Thurgood  (H.  M. Inspector of  Taxes(1)  "to  determine whether  a particular asset belongs to one category  or  the other"  nor  does it depend in any way "on what may  be  the nature  of  the asset in fact or in law." In our  own  Court this difficulty has been put very tersely,. if we may say so with respect, by Hidayatullah, J. (as lie then was) in Abdul Kayoom v. Commissioner of Income-tax(2) when he said:               "...... none of the tests is either exhaustive               or  universal.  Each case depends on  its  own               facts, and a close similarity between one case

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             and  another  is not enough,  because  even  A               single significant detail may alter the entire               aspect.   In deciding such cases,  one  should               avoid the temptation to decide cases (as  said               by   Cordozo.  The  nature  of  the   Judicial               Process, p. 20) by matching the colour of  one               case  against  the  colour  of  another.    To               decide, therefore, on which side of the line a               case  falls, its broad resemblance to  another               case is not at all decisive.  What is decisive               is  the nature of the business, the nature  of               the  expenditure,  the  nature  of  the  right               acquired,  and  their relation inter  se,  and               this  is the only key to resolve the issue  in               the light of the general principles, which are               followed in such cases." The determining factor will depend largely on the nature of the  tract-,  in which the asset is employed.   The  several cases  which  do  not deal with the mining  leases  but  are concerned  with different assets are of little help  in  the same  way  as  in Mohanlal  Hargovind  v.  C.I.T.(3),  cases relating  to  the purchase or leasing  of  mining  quarries, deposits  of  brick  earth  were considered  not  to  be  of assistance  by the Privy Council in case of a  contract  for collecting  and  removing  tendu  leaves.   The   principles enunciated  for  determining the nature of  the  expenditure have  been  sought  to be applied  to  different  situations arising  on  the facts of each case, but the  difficulty  in matching  them  with  the  seeming  irreconciliabiliiy   are perhaps explicable only on the ground that the determination in any particular case is dependent on the character of  the lease or agreement, the nature of the asset, the purpose for which the expenditure was incurred and such other factors as in the facts and circumstances of that case would  indicate. If  we  confine  our attention to the  mining  leases,  what appears to us (1) 18 T.C. 280. (3) 17 I.T.R. 473. (2) 64 I.T.R. 689 at 703. 36 5 to  be an empirical test is that where minerals have  to  be won, extracted and brought to surface by mining  operations, the expenditure incurred for acquiring such a right would be of a capital nature.  But where the mineral has already been gotten and is on the surface, then the expenditure  incurred for obtaining the right to acquire the raw material-that is- the mineral, would be a revenue expenditure laid out for the acquisition of stock-in,trade.  An expenditure incurred  for acquiring  a  right to take away sand from  the  surface  of river  beds  has been treated as if the sand  was  stock-in- trade,-M.A.  Jabbar v. Commissioner of Income-tax(1) in  the same  way  as tendu leaves have been treated  by  the  Privy Council  in Mohanlal Hargovind’s case.  In the former  case, Bhargava, J. indicated a number of factors which led to  the conclusion that the expenditure incurred by the assessee  in obtaining the lease was revenue expenditure for the  purpose of  obtaining  stock-in-trade and  not  capital  expenditure which were : (1) that the lease was for a very short  period of  11  months  only;  (2) that the  sole  right  which  was acquired  by the assessee under the lease deed was  to  take away the sand lying on the surface of the leased land  where no  question of raising, digging or excavating for the  sand before  obtaining  it  was involved.   In  other  words,  no operation had to be performed on the land itself and "is not a  case where the gravel is in any true sense" as  appointed

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out in Golden Horse Shoe (New) Ltd.’s case "was won from the soil  .... it is merely shovelled up where it lies." In  the latter  case the Privy Council said that the leases for  the right  to  collect  and remove tendu leaves  under  which  a certain  sum was payable by instalments as  a  consideration for  the  grant of that    was a   revenue   expenditure  it pointed  ’Out that the contracts were short  term  contacts, that  the  picking  of the leaves had to start  at  once  or practically  at  once and to proceed continuously  and  that under the contract it is tendu leaves and nothing but  tendu leaves that are acquired.  At page 478 while comparing  that case   with  the  case  of  Kauri  Timber  Co.  Ltd.    I.,. Commissioner  of  Taxes(2  )where  the  company’s   business consisted  in cutting and disposing of timber and it had  in some cases acquired timber-bearing lands and in other  cases it purchased the standing timber, the lease itself being for 99 years, the Privy Council observed               "In  the  present  case  the  trees  were  not               acquired  nor were the leaves  acquired  until               the appellants had reduced them into their own posse ssion  and  ownership by  picking  them.               The   two  cases  can,  in  their   Lordshops’               opinion,   in   no  sense   be   regarded   as               comparable.   If  the tendu leaves  had.  been               stored in a (1) 68 I.T.R. 493            (2) [1913] A.C. 771. 366               merchant’s  godown  and  the  appellants   had               bought  the right to go and fetch them and  so               reduce   them   into  their   possession   and               ownership   it   could  scarcely   have   been               suggested that the purchase price was  capital               expenditure.  Their Lordships see no ground in               principal  or reason for  differentiating  the               present case from that supposed." The analogy referred to in the above passage is sought to be applied  to the facts of this case but in our view there  is hardly any justification for such a conclusion having regard to   the  findings  of  the  Tribunal  and  the   income-tax authorities. The  learned  advocate for the assessee  contends  that  the Income-tax Officer, the Appellant Assistant Commissioner and the Tribunal, each of them had given different findings  for coming  ,to  the conclusion that the expenditure  was  of  a capital nature while the High Court gave yet another  reason to  answer the questions against the assessee.  Inasmuch  as the  correctness or otherwise of the order  depends  greatly upon what has been found as facts. of this case, it would be useful to examine the respective orders. The Income-tax Officer, as we have earlier stated held  that the  money  was  paid for the value of the  land  which  the assessee  had  acquired  because the  mine  granted  to  the assessee had already been worked by other private companies. This finding, according to the learned advocate, is contrary to  the  facts set out in the statement of the case  by  the Tribunal in which a reference was made to paragraph 5 of the invitation to tender.  It reads               "As the area has been worked by a private com-               pany  during the past fifteen years,  all  the               known mines and quarries and prospecting  pits               have acquired a value which can be  determined               on   the  principles  of   ’mine   valuation’.               Intending  applicants are therefore  requested               to  visit the area before April 15,  1950  and               assign their own value and offer it.

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According  to the assessee, as already pointed out,  it  had offered Rs. 1,57,150/ after the mica had been valued on  the principles of mine valuation which represented a payment  of stock-in-trade.   The Appellate Assistant  Commissioner  has rejected  the claim of the assessee with these  observations :-               "On  merits  the appellant’s claim  cannot  be               sustained  because the circumstances  detailed               above,  clearly indicate that the  payment  of               tender  money  was  for  the  acquisition   of               capital  asset and not, as sought  to-be  made               out, for the stock of ores.  The stock was not               367               here on the surface but it was still  embedded               with the only difference that its availability               could  be more definitely gauged than  in  the               case  of an unworked area.  It would not  make               any  material  difference  whether  the  miner               acquires a lease on ordinary terms for an area               which does not give a clear indication of  the               possible  existence of ore or he  acquires  on               more expensive terms an area which is in  such               a condition that it gives definite  indication               about  the  possibility of  existence  of  ore               therein  and also broadly the extent  thereof.               Acquisition  in  either  case would  be  of  a               capital asset and payment therefore, small  or               large, a capital expenditure." Earlier the Appellate Assistant Commissioner had stated that when  the lease was allotted to the appellant by the  Mining Department  "it was made clear that any mica scrap  left  by the  predecessor  exploiters M/s.  Duduwala &  Co.,  on  the surface  would be removed either by these exploiters  within three  months or if not so removed it would stand  forfeited to  the Rajasthan Government in any case it was not to  come to the appellants." In the light of what has been stated, it is  clear that the Appellate Assistant Commissioner  made  a distinction  between  mica  that  has  been  ,excavated  and brought  it;  the  surface  and the  mica  which  was  still embedded  and  had to be excavated even though it  was  more easily avail-able because of the labour already expanded  in the working out of the mine by the other private companies. The conclusions of the Tribunal are set out in the following passage .-               "In  our  opinion, the amount paid  cannot  be               equated to payment for raw materials.  The raw               materials have to be won and extracted  before               they could be said to be stock-in-trade.   The               sum represents the price that was paid by  the               assessee  for obtaining the right to,  extract               and win emerald and mica in an area which  had               already   been  worked  and  developed  by   a               predecessor for 15 years.  If the assessee had               to  start  running  a mine, it  had  to  incur               similar expenditure.  In this case, the amount               had  been  incurred and was paid  for  by  the               assessee.   Thus  this amount in  our  opinion               represents  capital expenditure  incurred  for               the purpose of obtaining certain benefits of a               capital nature.  This is not in the nature  of               any  royalty or rent paid by the  assessee  to               the   authorities.    In   this    connection,               reference  was made on behalf of the  assessee               to  the provisions of Rule 51 of  the  Mineral               Concession Roles which prohibits premium being

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             paid for obtaining such a licence.  This  rule               occurs in Chapter 5 which applies to grant               368               of mineral concessions by Private persons  and               we  do not consider that the rule is  relevant               for  considering the question in issue  before               us where the grant is by the State.  We do not               also  think that this is in the nature of  any               premium.   This is merely for the  purpose  of               getting  benefits  of certain  structures  and               other works carried out in the area which  had               already  been  worked as  a  mine  previously.               This  cannot be equated to a premium  that  is               contemplated  by rule 5 1. We therefore  agree               with the authorities below in holding that the               assessee  has not made out the claim  for  de-               duction of the amount." The  finding of the Tribunal given in the above  excerpt  is clear  and  consistent  with that given  by  the  Income-tax Officer and the Appellate Assistant Commissioner in that all of  them  distinguished  between  raw  materials  which  had already been extracted and brought to the surface and  those that  have still to be extracted.  Apart from the  objection that no question was formulated by which the findings of the Tribunal  were challenged on any admissible  grounds,  there are,  in our view, no contradictions in the fin-ding of  the Tribunal  as  submitted  by the  learned  advocate  for  the assessee  because what the Tribunal was dealing with in  the latter part of the passage cited above, were the contentions urged  on behalf of the assessee, firstly, that  the  amount was a royalty or rent ’paid to the authorities and secondly, what was paid was in the nature of premium.  While rejecting these contentions the Tribunal gave its reasons but that  is not to say that the conclusion that the amount was a capital expenditure was not based on the finding that mica had to be extracted  and  brought to the surface before  it  could  be considered as the assessee’s stock-in-trade. In  our view the principles which have been applied  in  the Pingle Industries’ case are equally applicable to the  facts and  circumstances of this case.  The test for  ascertaining whether the amount spent is of a capital nature is,  whether it was spent for obtaining a right of an enduring character which in the case of mining leases is to acquire rights over land  for winning the mineral.  In other words,  where the mineral is part of the land and some mining operations  have to  be  performed to extract it from the earth,  the  amount paid  to  acquire a right over or in the land to win  that mineral  is  of an enduring character and  hence  a  capital expenditure.  In this case the mica pillars which have  been exposed  by the mining operation of other private  companies had  no  doubt  enhanced the value of the  right  which  was leased 369 to the appellant but nonetheless.the appellant still had  to carry out some mining operations to extract the mineral from the pillars which was embedded in the land.  If the  private companies  before the mica was exposed had taken the  lease, they would have paid a much lesser amount which  nonetheless would have been a capital expenditure.. It is the labour and expense which the private companies expanded that has enured for  the benefit of the Government and enhanced the  capital value of the lease. This is not a case as is      contended, of  mica  having  been  given so as  to  form  part  of  the stock-in-trade  of  the assessee as in the  case  of  Golden Horse  Shoe  (New)  Ltd. v. Thurgood (H.   M.  Inspector  of

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Taxes)  (1) In that case the company had acquired rights  in certain dumps of ’tailings’ or residuals that remained after the  extraction  of gold from ore taken  from  certain  gold mines.   It was contended on behalf of the revenue that  the company’s  rights  in tailings and dumps were  part  of  the undertaking which the company was formed to acquire and  any sum  paid  therefore was capital expenditure, and  that  the company’s  rights in the dump was the purchase of a  wasting asset.   This contention was negatived and it was held  that the  purchase  price  of, the  tailings  was  an  admissible deduction in computing the company’s profits for income-tax purposes . Lord Hanworth, M.R. at page 298   observed               "After  careful consideration of, the  present               case,  in  the  course of which  my  mind  has               fluctuated  on either side, I think it is-  to               be decided upon its own facts-that none of the               tests suggested affords a strict rule of guid-               ance.  It seems, then, that the Company bought               these dumps-which were no longer in a  natural               but in an artificial condition; which were  in               such  a state that they would not have  passed               under  a lease-of "beds opened,  or  unopened,               minerals", see Boileau v. Heat Ch. D. 301)-for               the purpose of treating them as the  stock-in-               trade,  lying stored and ready to their  hand,               at  a fair- price of pound 122,750, and  their               intention  was  to use them up and  make  what               they  could  of them by and  after  treatment.               They  had not to win them from the soil;  they               had  been gotten already.  If the metaphor  of               working  a mine be applied, it might  be  said               that  the purchase of the dumps was a  capital               outlay.             If the metaphor of  making               gas  or coke from coal, or of a miller  making               flour  from wheat, be applied, it may be  said               that  it  was an outlay to be  placed  in  the               profit and loss account.  But metaphors do not               provide   exact  definitions  and  are   often               misleading.        It is safer               (1)   18 T.C. 280.               370               to give an interpretation to the facts of this               case as found in the case stated and upon  the               law relevant to them.  " This passage at once indicates the difficulties which he  in common  with  other  Judges  have  felt  When  called  :upon determine the nature of the expenditure. The lease in this case was for a long period it conferred a right  to excavate the mica because on the findings  of  the Tribunal mica had to be extracted from the mine though,  the ,earlier  working out of the those mines by other  companies had made it much easier to perform the final operations  and because  of it a higher amount had to be paid.   Nonetheless the amount paid was for acquiring a right of enduring nature to  extract and remove the mica to bring it to the  surface, grade  it  and pay royalty to the Government  in  accordance with  the  quality  of Leach grade of  mica  extracted.   We accordingly hold that the ,expenditure incurred is a capital expenditure  and that the second question has  been  rightly answered. On the first question whether the prospecting licence fee of Rs.  3,200/-  is  allowable  as  revenue  expenditure,   the contention on  behalf  of the assessee is  that  it  is  a licence  fee,  not  a lease amount nor  does  it  create  an interest in the land.  The Income-tax Officer, the Appellate

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Assistant  Commissioner and the Tribunal have all held  that the  fee paid for prospecting licence was not ,of a  revenue nature.   It was submitted before the Tribunal that under  a prospecing  licence  issued under Chapter 3 of  the  Mineral Concession  Rules, 1943 the licensee had a right to win  and carry  away  the minerals for commercial purposes,  and  for that  reason the amount should be treated as in  the  nature ‘of  a purchase price of a stock-in-trade.  In  support  of this contention the provisions of T. 23 were referred to but the  Tribunal rejected that contention because in  its  view the amount was paid, as and by way of prospecting fees which was  for  initiation of a business as in the case  of  other minerals  and  that the character of the  licence did  not change  merely because the licensee had certain rights  over the minerals obtained under the prospecting licence nor  was it based on any quantity’ of minerals.  The minerals had  to be   won  and  extracted  from  the  earth  and   the   term ’prospecting  licence’  shows  that the  mine  has  not  yet started  working as a mine.  It was a fee paid  irrespective of  the  quantity of minerals  obtained  which  demonstrated clearly  that the object of the payment was to initiate  the business.  That apart, the period for which the licence  was obtained  viz.,  one year, does not also make it  a  revenue payment  and  consequently  it  held  that  the  authorities Tightly  disallowed the amount.  The finding by the  Income- tax  ;authorities  as well as the Tribunal that  it was  a payment for 371 initiating the mining operations was a finding of fact.   In oar  view  also  the, fee was paid to obtain  a  licence  to carryout, investigate, search and find the mineral with the objectof conducting the business of extracting ore from  the earth.It is therefore clear that the fee was  paid for initiating the business and is of a capital nature.   By no  stretch of argument can the fee paid for  a  prospecting licence  be  equated to a payment made for the  purposes  of stock-in-trade.   We think that the Income-tax  authorities, the Tribunal and the High Court are right in coming to  that conclusion.  Our answer to the first question is,  therefore also  in  the  negative.   The  two  questions  having  been answered against the assessee, the appeal is dismissed  with costs. V.P.S.                        Appeal dismissed. 372