DIVAN, J. - (1.)INCOME -tax Reference No. 79 of 1970 has been made by the Tribunal at the instance of the assessee, but at the time of making that reference, the Tribunal referred only one question and did not refer the particular question which the assessee wanted to be included in the reference. Thereafter, the assessee applied to this court by Income -tax Application No. 44 of 1971, and in pursuance of the directions issued by this court in that application, another question relating to the same assessee and the same assessment year and the same assessment proceedings has been referred by the Tribunal. Since both these references deal with the same matter and arise out of the same order of the Tribunal, we will dispose of both of them by this common judgment.
(2.)IN Income -tax Reference No. 79 of 1970, the question that has been referred to us i :
'Whether, on the facts and in the circumstances of the case, the furniture could have been taken as stock -in -trade of the business of the assessee ?'

In Income -tax Reference No. 37 of 1971, the question which is referred to us i :

'Whether, on the facts and circumstances of the case, the claim of the assessee to allow Rs. 25,127 as revenue expenditure was allowable under the Income -tax Act, 1961 ?'

(3.)THE assessee is a partnership firm and the assessment year is 1962 -63, the relevant accounting year being S. Y. 2017. The assessee -firm carries on business of hiring out furniture for marriage functions, circus shows and other public functions and derives income from this business. During the relevant accounting year, the assessee claimed a sum of Rs. 25,127, being the deficit in stock of furniture. The Income -tax Officer rejected the loss but allowed depreciation on furniture according to the normal rules. Against this decision of the Income -tax Officer, the assessee went in appeal to the Appellate Assistant Commissioner and there it was contended on behalf of the assessee that the claim of loss should have been allowed inasmuch as the furniture which was let out for various functions would get destroyed or spoiled and the depreciation under the normal rules was inadequate. The Appellate Assistant Commissioner thought that the assessee deserved some relief and he allowed the total allowance of Rs. 10,000 and since the Income -tax Officer had already allowed a sum of Rs. 6,204 as depreciation, the Appellate Assistant Commissioner allowed a further deduction of Rs. 3,796. Against this decision of the Appellate Assistant Commissioner, the assessee went in further appeal before the Tribunal and the same contentions which were urged before the Appellate Assistant Commissioner were reiterated before the Tribunal. The assessee also contended before the Tribunal that the furniture was stock -in -trade of the assessee and as such the loss of stock -in -trade as worked out by it should be allowed as a trading loss. Both these contentions were examined by the Tribunal and it held that the furniture could not be treated as stock -in -trade but it was a capital asset. So far as the claim for higher depreciation was concerned, the Tribunal held that the assessee was not entitled to more than what is admissible under the normal rules and the Tribunal also examined the provisions of section 32(1)(iii) of the Income -tax Act, 1961, and ultimately held that the assessee could not get the benefit of section 32(1)(iii) for the relevant period under consideration. Thereafter, at the instance of the assessee, the questions above set out have been referred to us, one by the Tribunal on the application of the assessee before it and the other in pursuance of the directions given by this court.
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