HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
M. A. Jabbar v. Commissioner of Income-tax, Andhra Pradesh, Hyderabad
Civil Appeals Nos. 2514 and 2515 of 1966
[1968] 2 SCR 413 ·
Indian Income-tax Act, 1922: business-income deduction principles applied in the section 66 reference framework; the report does not identify a specific deduction subsection in the operative reasoning
Sources & disclosures includedDownload original judgment / order
3-judge bench; unanimous judgment delivered by V. Bhargava, J. · J. C. Shah, J. · V. Ramaswami, J. · V. Bhargava, J.
Assessment years: 1955-56, 1956-57
01 · Facts of the case
M. A. Jabbar carried on a lime-and-sand supply business. Under a lease deed dated 1 February 1954 he paid the Hyderabad Government Rs.82,500 for an eleven-month term ending 31 December 1954. He claimed Rs.56,100 in assessment year 1955-56 and Rs.26,400 in assessment year 1956-57 as revenue expenditure. The officer treated the payment as the price of a capital quarrying right. After personal investigation, the first appellate authority found that the contract concerned loose sand on the river-bed surface, involved no excavation or skilful extraction, and supplied stock-in-trade. The Tribunal affirmed; the Andhra Pradesh High Court reversed and answered the reference against the assessee (SCR pp.414-415; PDF pp.2-3).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
The deed's exclusive right to enter and occupy the land and its use of the word 'sublet' for newly discovered minerals showed that an interest in land was conveyed. That did not answer the capital-versus-revenue question: the decisive inquiry was the lease's business object and the nature of the payment. Rent can remain revenue expenditure even though the tenant acquires an interest in premises (SCR p.416; PDF p.4). The Tribunal had accepted the factual finding that the sand lay loose on the surface and required no excavation. Because no no-evidence question was referred, the High Court exceeded its reference jurisdiction by reassessing that finding. On that binding premise, the eleven-month right procured sand as stock-in-trade and no fixed or enduring asset (SCR pp.416-417; PDF pp.4-5). Goran Lime Syndicate and the commercial-trading formulation in Bombay Steam Navigation supported revenue treatment; Abdul Kayoom was distinguished because it concerned reservation of a source requiring operations to obtain chanks rather than removal of loose surface material (SCR pp.418-420; PDF pp.6-8).
Source: Primary judgment: discussion
03 · Judicial decision
The Court allowed both appeals with costs, set aside the High Court's order and answered the referred question in the affirmative: the Rs.56,100 and Rs.26,400 payments were expenditure of a revenue nature on the facts found (SCR p.420; PDF p.8).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of M. A. Jabbar/the assessee-appellant. The sand-lease payments for assessment years 1955-56 and 1956-57 were deductible as revenue expenditure on the binding factual record (SCR pp.419-420; PDF pp.7-8).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: identify what the taxpayer actually obtained before applying an enduring-benefit label—ownership or reservation of a source, an enduring extraction infrastructure, or a short right to remove already available trading material. Also preserve the reference court's limits: where the Tribunal's factual finding is unchallenged by a properly framed no-evidence question, tax characterisation must proceed on that premise. This historical result is not a shortcut for present-law mining or quarry deductions; lease duration, extraction work, asset rights and payment structure require fresh analysis (based on SCR pp.416-420; PDF pp.4-8).
Source: Primary judgment: reviewPoint
Source & verification
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Statutory scope
The decision concerns expenditure characterisation under the repealed Indian Income-tax Act, 1922 on a tightly bounded 1954 sand-lease record. It does not itself determine deduction under the Income-tax Act, 1961 or the treatment of a materially different mining, quarrying or extraction arrangement. No current-law or later-treatment clearance was undertaken.
Later treatment
Source checked 2026-10-11. Later judicial treatment and current statutory applicability have not been comprehensively checked; no current-law or citator clearance is represented.
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