It is not enough, that the expenditure is incurred merely because the trade is being carried on and that it can be shown that it would not have been incurred otherwise. If the expenditure falls upon a person in a capacity other than as a trader, no deduction is available.
In Strong & Co Ltd1 damages payable to a hotel guest for injury he sustained while in the hotel were held to be expenses unconnected with the trade and, therefore, non-deductible. The expense was incurred not in the company's capacity as an innkeeper but as the occupier of the property in question. Lord Loreburn LC, in his opinion, gave as an example of losses which might be deductible, the amounts paid by a railway company to passengers as compensation for injuries suffered in an accident while travelling. He contrasted that example with the case
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