STONE, C.J. - (1.)THE judgment about to be delivered by my learned brother is the judgment of the Court.
(2.)CHAGLA, J. - This is a reference under Section 66(1) of the Indian Income-tax Act and is with regard to the assessment for income-tax purposes of Messrs. Vithaldas Thakordas & Co., a firm, in respect of the assessment year 1942-43, the relevant accounting period being the 1st November, 1940, to the 20th October, 1941.
The point which we have to determine concerns the sum of Rs. 5,059 and is a short one, though not one which is free from difficulty. As referred to us by Tribunal, the questions asked are :-

(1) Whether in the circumstances of the case the payment of Rs. 5,059 made by the assessee firm to Mrs. Tarabai widow of the Vithaldas Thakordas was rightly held to be an appropriation of profits ?

(2) If the sum paid to Mrs. Tarabai was an item of expenditure, whether in the circumstances it was an item of revenue expenditure, and admissible for deduction under Section 10(2)(xii) of the Indian Income-tax Act, 1939 ?

On the 1st of November, 1930, Mr. Vithaldas Thakordas died, leaving his widow, Bai Tarabai, him surviving. He had, during his lifetime, carried on in his own name a bullion business of which he was the proprietor, and upon his death under arrangements made by Bai Tarabai in the first instance with five persons and subsequently with four of them the name "Vithaldas Thakordas" was used by three persons in carrying on their business in partnership. One of the four persons died and on the 25th of January, 1939, by a partnership deed of that date, the firm was reconstituted by the three survivors and a new arrangement was entered into by the new partnership with Bai Tarabai for the use of the name "Vithaldas Thakordas." Whether the consideration, being the sum of Rs. 5,059 paid by the new partnership to Bai Tarabai for the use of the name, is a deduction within the meaning of Section 10(2)(xii) of the Act must depend not only upon the construction of that sub-section but upon the nature of the arrangements entered into by partners. However, when this reference first came before this Court, the arrangements, which it now appears were evidenced by a written document, were not included in the case referred to us. Accordingly on the 11th of October, 1944, the reference was remitted back to the Tribunal, and our learned brother Kania in delivering the judgment of this Court said :-

"In the absence of the necessary findings about the nature and the terms of arrangement between Mrs. Tarabai and the assessee firm we are unable to consider the questions referred to us. Under the powers vested in this Court under Section 66(4) of the Act we therefore the matter back to the Tribunal to enable them to state to the Court further facts in respect of the nature and terms of arrangement between Mrs. Tarabai and the assessee firm in connection with the use of the name of Messrs. Vithaldas Thakordas & Co. by the assessee firm in respect of their bullion business in the year of account."

(3.)SECTION 10(2) of the Act provides that profits and gains of any business, profession or vocation shall be computed after making the allowances mentioned in the sub-paragraphs to that sub-section and it is with sub-paragraph (xii) with which we are concerned. It is as follows :-
"any expenditure (not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of such business, profession or vocation."

So in order to come within sub-paragraph (xii) the sum in question must be an expenditure, which is not in the nature of a capital expenditure, and it must be an expenditure "wholly and exclusively for the purpose of the business.

;