COMMISSIONER OF INCOME TAX, BOMBAY versus FINLAY MILLS LTD.

Citation: [1952] 1 S.C.R. 11 · Decided: 01-10-1951 · Supreme Court of India · Bench: HARILAL JEKISUNDAS KANIA · Disposal: Dismissed

Judgment (excerpt)

S.C.R. 
SUPREME COURT REPORTS 
11 
1951 
-·-
We are therefore of the opinion that it was a pan of 
the normal activtties of the assessee's business to earn 
money by making use of its machinery by either em-
ploying it in its own manufacturing concern or tem-
porarily letting it to others for making profit for that 
business when for the time being it could not itself run 
it. The High Court therefore was in error in holding 
that the dyeing plant had ceased to be a commercial 
asset of the assessee and the income earned by it and 
received from the lessee, Messrs Parakh & Co., was not 
Commissioner of 
Excess Profits 
Tax, Bombay 
· chargeable to excess profits tax. 
The result therefore 
is that we hold that the answer returned by the High 
Court to the question referred to it by the 
Tribunal 
was wrong ;:ind that the correct answer to the question 
would be in the affirmative and not in the nagative. 
The appeal is allowed, but in the circumstances of 
the case we make no order as to costs. 
We have not 
thought it necessary to refer to all the cases cited as 
the Bar as none of them really is in point on the short 
question that we were called upon to decide and analo-
gies drawn from them would not be helpful in arriving 
at our decision. 
Appeal, a/,lowed. 
Agent for the appelant : P. A. Mehta. 
Agent for the respondent : P. K. Chatterjee. 
COMMISSIONER OF INCOME TAX, BOMBAY 
v. 
FINLAY MILLS LTD. 
[HARILAL KANIA c. J., MEHR CHAND MAHAJAN AND 
CHANDRASEKHARA AIYAR JJ.] 
Indian Income-tax Act (XI of 1922), s. 10(2) (xv)-Expenditure 
incurred for 
registration of trade 
mark-Whether business expen-
diture-Effect of registration. 
The expenditure incurred by a company carrying on the manu-
facture and sale of textile goods in registering for the first time 
its trade. marks which were not in use prior to the 25th January,, 
. City 
v. 
Sri Lakshmi 
Silk Mills Ltd. 
Mahajan /. 
1951 
Oct. I. 
1951 
.Commissioner of 
Income Tax, 
Bombay 
v • 
. Finlay Mills 
Ltd. 
12 
SUPREME COURT REPORTS 
[ 1952] 
1937, is revenue 
expenditure 
and an allowable 
deduction under 
Sec. 10 (2) (xv) of the Indian Income-tax Act. The fact that a 
trade mark after registration could be separately assigned and not 
as a part of the goodwill of the business only, does not n1ake the 
expenditure for 
registration 
capital 
expenditure. 
It is 
only an 
additional and incidental 
facility given to the 
owner of the trade 
mark; it adds nothing to the trade mark itself. 
Judgment of the Bombay High Court affirmed. 
Commissioner of lncome~tax, Bonibay v. The Century Spinning 
and Weaving and Manufacturing Co. Ltd. ([1947] 15 l.T.R. 105) 
approved. British 
Insulated and Helsby 
Cables Ltd. v. Atherton 
' 
([1926] A. C. 205), Southern v. Borax Consolidated Ltd. ([1942] 10 
l.T.R. Supp. 1), Henriksen v. Grafton Hotel Ltd. ([1942] 2 K. B. 
' 
184) referred to. 
Civ1L 
APPELLATE 
JuR1smcTioN : 
Civil Appeal 
No. 103 of 1950. 
Appeal from a Judgment of the Bombay High Court 
(Chagla C. J. and Tendolkar J.) dated 25th March, 
1949, in Income Tax Reference No. 31 of 1948. 
M. 
C. 
Setalvad, 
Attorney-General 
for 
India 
( G. N. Joshi, with him) for the appellant. 
R. /. Kolah, for the respondent. 
1951. Oct. 1. The 
Judgment 
of 
the 
Court was 
delivered by 
KANIA C. J .-This is an appeal from a judgment of 
the High Court at Bombay and it arises out of the 
opinion expressed by the High Court in respect of a 
question submitted to it by the Income-tax Tribunal. 
The material facts are these. The respondent is a tex-
tile mills company carrying on the business of manufac-
turing and selling textile goods. . For the assessment 
years 1943-44 and 
1944-45, covering the 
accounting 
periods ending with the calendar years 1941, 1942 and 
1943, the respondent claimed the expenditure incurred 
by it in registering for the first time its trade marks 
which were not in use prior tp the 25th February, 1937, 
as revenue expenditure and an allowable deduction out 
of its income for the said periods, under section 10(2) 
(xv) of the Indian Income-tax 
Act. 
Following the 
decision 
of 
the Bombay H'igh Court in Commis-
$ioner of Income-tax, Bombay v. The Century Spinning 
' 
t 
t -
$.C.R. 
SUPREME COURT REPORTS 
13 
,and Weaving and Manufacturing Co. Ltd.(1), the Tri-
bunal allowed the claim of the assessee. 
At the desire 
:of the appellant, the Tribunal submitted the following 
;.question for the opinion of the High Court :-
"Whether, on the facts of the c

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