Y.S.TAMBE, J. - (1.)IN this reference two questions have been referred to us by the Tribunal one under S. 66(1) of the Indian IT Act and the other in compliance with the requisition of this Court under S. 66(2) of the Act.
(2.)THE assessee, Bhor Industries Limited, is a private limited company incorporated in the former Indian State of Bhor. The assessee was desirous of introducing new industries in the Bhor State and for the said purpose an agreement was entered into between the assessee on the one hand and the Diwan of the Bhor State, representing the Bhor Darbar on the other, on 18th Feb., 1943. The material terms of that agreement are in the following terms : "1. The State agrees to give to the party of the second part (the assessee) or to any other companies that may be formed by the party of the second part, the sole monopoly for starting and working a factory or factories for proofing of cloth of various types and that the State will not grant any licence or permit nor will it allow any other person, firm or company or other association, to manufacture articles similar to the articles manufactured by the party of the second part for a period of at least ten years from the date of the starting of the industry.
2. The State hereby agrees that in respect of any land or other immoveable property purchased by the party of the second part which is in any way connected with the industry, no tax in addition to the existing tax that may be payable by the landlord to the State shall be levied on the party of the second part to the intent that save and except the existing landlord's burdens in respect of immoveable properties, the party of the second part shall not be bound to pay any other tax of any other kind whatsoever (excepting non -agricultural cess that may be levied in accordance with the Land Revenue Code of the State and applied to other subjects of the State) that may be levied by the State in respect of any property whether for residential or business purposes and that the party of the second part shall also not be bound to pay any increased tax in respect of landlord's burdens except in the event of there being a general increase of such taxation for all landlords in the State.

3. The party of the second part shall not be liable and the State shall not charge the party of the second part with any income -tax, super tax, excess profits tax or any other tax on profits of any kind whatsoever for a period of ten years from the date hereof whether such taxes are in existence at present or introduced hereafter save and except the toll. 4 . .................................... 5 . .................................... 6. The State agrees that if at any time in future any legislation similar to the Indian Factories Act relating to industry or labour is introduced in the State, the party of the second part shall be exempt from its application for a period of ten years from the date of the starting of the industry. 7. In consideration of the benefits granted to the party of the second part as hereinabove mentioned, the party of the second part agrees to pay to the State every year by way of royalty for the first ten years since the starting of the industry an amount equivalent to 6 1/4 (six and a quarter) per cent. and for the next five years an amount equivalent to 12 1/2 (twelve and a half) per cent. of the profits of the company as ascertained by the registered accountants after making provision for payment of 25 (twenty five) per cent. of the profits for use of the patent or commission equivalent to that amount also for depreciation at the rates at present in force for depreciation under the Indian IT Act and the amount shall be paid within three months of the accounts being audited and certified by the auditors appointed as hereinabove mentioned."

In the relevant asst. year 1946 the assessee was assessed as a non -resident company. The business of the assessee, inter alia, consisted of dyeing, printing and bleaching cloth. The entire dyeing, printing and bleaching work at Bhor was done for four allied companies belonging to the Thackersey group, three of them had their registered offices in the then British India and the fourth company had its registered office at Bhor. The three companies having their registered offices in the then British India had sent their grey cloth to the assessee company for bleaching, dyeing and processing at Bhor. The dyes and chemicals for bleaching were purchased in British India. The said three companies of the Thackersey group made payments for the work done by the assessee company by cheques. The cheques were drawn on British Indian banks. In the relevant assessment year the assessee company paid a sum of Rs. 34,650 to the Bhor Darbar in pursuance of the aforesaid seventh clause of the agreement of date 18th Feb., 1943. We are here concerned with the claim of the assessee that the amount of Rs. 34,650 was allowable as a deduction, it being a revenue expenditure and the claim of the Revenue that the payment made to the assessee company by the three companies of the Thakersey group by cheques was income received by the assessee in British India. The ITO had rejected the claim of the assessee to the deduction of the said amount of Rs. 34,650 and had upheld the claim of the Revenue that the said amount received by cheque by the assessee company was income received by the assessee company in British India within the meaning of S. 4(1)(a) of the Indian IT Act. It may be stated that at the time the case was pending before the ITO, the decision of the Supreme Court in Ogale Glass Works Ltd. (1954) 25 ITR 529 (SC), was not available, but by the time the case came up before the AAC it was. Placing reliance on this decision the AAC disallowed the claim of the Revenue that the amount received by cheques from the three companies of the Thackersey group was income received by the assessee in British India. The AAC, however, rejected the claim of the assessee in respect of the said amount of Rs. 34,650. Both the assessee as well as the Revenue filed appeals before the Tribunal, the assessee challenging the inclusion of the said amount of Rs. 34,650 in his income and the Revenue challenging the exclusion of the said amount in the income of the assessee. The Tribunal rejected the claim of the assessee for the exclusion of the said amount from the income of the assessee. It, however, partly allowed the appeal of the Department : in the sense that it remanded the case to the AAC with a direction to him to give the parties an opportunity of leading evidence and to ascertain whether the cheques were sent by post or by hand as was contended for by Mr. Mulla on instructions at the time of the hearing and further whether the cheques were sent on request of the seller either express or implied and the Post Office, if any, at which the cheques were posted and the quantum thereof, and thereafter to dispose of the appeal in accordance with law.

(3.)ON an application made by the assessee, the Tribunal drew up a statement of the case and referred the following question to this Court under Sub -S. (1) of S. 66 of the Act :
"Whether on the facts and circumstances of the case the sum of Rs. 34,650 paid to the Bhor State under the agreement is a permissible allowance under S. 10(2)(xv) of the Act ?"
The Tribunal, however, rejected the application of the assessee so far as it related to the request of the assessee for referring the other questions to this Court. The assessee, therefore, moved this Court under Sub -S. (2) of S. 66 of the Act and on a requisition made by this Court the Tribunal has also drawn up a supplemental statement of case and has referred to us the following question :
"Whether on the facts of the case the Tribunal misdirected itself in making the order of remand, which it made on 9th May, 1958, in Income -tax Appeal No. 8639 of 1956 -57 ?"
We will number as No. 1 the question referred to us under S. 66(1) and the other question as No. 2.