The point at issue was whether the cost of deepening a mine
shaft was a capital or revenue expenditure for tax purposes (see
BIM62010).
The company operated a tin mine, the ore in one part of which
was exhausted. The company therefore deepened one of the main
shafts, not for the purpose of winning ore from a vertical lode,
but for the purpose of exploring for pockets of ore and obtaining
access for men and materials to lower levels.
Held that the expenditure was capital and not an allowable
deduction.
Justice Horridge reversed the decision of the Commissioners.
They had concluded that the expenditure was a proper working cost
of the mine. He noted, at page 151, that:
"
I think the above description of the shaft
shows quite clearly that the money expended on the extension of the
shaft for a distance of 50 fathoms was in no sense a working
expenditure … and there is no statement in connection with
the description which could in any way be said to be evidence of
its being such working expenditure… they seem to me to point
in exactly the opposite direction and not to be capable on any
construction of them as affording such evidence."
