C.I.T. CENTRAL BOMBAY vs JALAN TRADING CO. (P) LTD.

The Supreme Court held that the payment of 75% of profits by the assessee company to the firm under a deed of assignment for the sole selling agency is not deductible as revenue expenditure under Section 10(2)(xv) of the Indian Income Tax Act, 1922. The Court established that such payments are capital in nature as they relate to the acquisition of a capital asset, which provides enduring benefits to the business. The appeal was allowed, affirming that the expenditure was properly attributable to capital and not deductible.