HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Assam Bengal Cement Co. Ltd. v. Commissioner of Income-tax, West Bengal
Civil Appeal 162 of 1952
[1955] 1 SCR 972 ·
Income-tax Act 1922, section 10(2)(xv)
Sources & disclosures includedDownload original judgment / order
4-judge bench · Mehr Chand Mahajan C.J. · S. R. Das · Bhagwati · Venkatarama Ayyar
Assessment years: 1945–46 and 1946–47; accounting years 1944–45 and 1945–46
01 · Facts of the case
Under a twenty-year limestone quarry lease, the company paid annual protection fees of Rs. 5,000 and Rs. 35,000 to prevent competing cement use of limestone in specified areas. It sought deduction of Rs. 40,000 in each relevant accounting year.
Source: Primary report: SCR 975–977
02 · Discussion by the Hon’ble Court
The Court synthesized capital/revenue tests: acquisition or extension of the profit-making structure differs from operating it; an enduring asset or advantage points to capital. Neither periodic payment nor payment from income changes the purpose and character of the acquisition. Enduring does not mean everlasting. The protective covenants enhanced the whole business asset over the lease term.
Source: Primary report: SCR 978–989
03 · Judicial decision
The protection fees were capital expenditure and not deductible under section 10(2)(xv). Appeal dismissed with costs.
Source: Primary report: SCR 989–991
04 · Outcome / in whose favour
Revenue succeeded.
Source: Primary report: SCR 989–991
05 · AKHB REVIEW POINT
Identify the commercial advantage purchased and its duration before treating payment frequency as decisive. Here protection against competitors benefited the undertaking as a whole, rather than paying ordinary operating costs.
Source: Primary report: SCR 986–991
Source & verification
Download original judgment / order · Open cited source rendition
Complete 20-page primary Supreme Court Reports scan. Adjoining report fragments, where present, are retained in the exact original; only the identified case is analysed.
Statutory scope
Historical predecessor legislation and the provisions expressly identified in this note. This is not a decision applying the Income-tax Act, 1961 or the Income-tax Act, 2025; verify any modern-law comparison independently.
Later treatment
Source checked 2026-10-23. Subsequent treatment and current-law applicability have not been comprehensively checked.
Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.
AI disclosure & professional disclaimer
This AKHB research note was prepared with AI assistance from an identified primary report. Independent human review is not represented.
General legal and tax research only; not legal or tax advice. Verify the complete judgment, applicable statutory version and subsequent treatment before reliance. The AKHB REVIEW POINT is editorial analysis, not the Court’s holding. No current-law clearance is claimed.