BIM62060 - Measuring the profits (particular trades): Mineral extraction: Robert Addie and Sons' Collieries Ltd v CIR [1924] 8TC671
The issue in this case was whether a sum representing the value of damaged lands was a capital or revenue payment for tax purposes (see BIM62030).
The company operated a coal mine and had been granted a lease of minerals that contained an obligation to restore all ground occupied under the lease, or that was damaged by mine workings. Alternatively, the company could choose to pay a sum based on the agricultural value of the land. The original lease was terminated and a lump sum payment was made in respect of the obligation.
It was held that the payment was capital expenditure on acquiring a fixed capital asset of the trade and was not an allowable deduction for tax purposes.
The Lord President Clyde noted that:
바카라 사이트˜Now when this Company began to work its mine it was obvious that it would require to use a certain amount of the surface of the lessor바카라 사이트™s estate for a number of purposes바카라 사이트¦ The acquisition of rights (of a permanency equal to the duration of the lease) to make use of the lessor바카라 사이트™s land for both purposes (roads, footpaths and disposal of debris) was one of the conditions precedent to the starting of the Company바카라 사이트™s business at the mine, just as much as the right to occupy his land for the purpose of the works at the pit-head; and the expenditure involved does not seem to me to be any less a capital expenditure than, for example, the cost of sinking the shaft.바카라 사이트™