B.P. Jeevan Reddy, C.J. - (1.) BY this application, the assesses is asking this court to refer the following three questions under Section 256(2) of the Income-tax Act, 1961 : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the expenditure of Rs. 2,16,264 for the direct feeder line of power not owned by the assessee-company was a capital expenditure ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the inauguration expenses of Rs. 54,714 were not to be capitalised as forming the cost of plant and machinery ? (3) If the answer to question No. 2 is in the negative, whether such expenses of Rs. 54,714 were of revenue nature deductible from the income of the assessee-company'?"
(2.) SO far as the first question is concerned, learned counsel for the asses-see has placed reliance upon the decision of the Bombay High Court in CIT v. Excel Industries Ltd. [1980] 122 ITR 995 wherein, in identical circumstances, the concerned expenditure was treated to be on non-capital account. In view of the said decision, we are inclined to direct the first question to be referred. So far as the second question is concerned, we are not satisfied that it ought to be referred. The inauguration expenses cannot be included in the capital expenses. So far as the third question is concerned, though it is true that orders of the Commissioner of Income-tax (Appeals) and the Tribunal do not disclose that this question was argued, it appears that this contention was urged in the respective grounds of appeal. We are inclined to direct reference of the third question also.
(3.) ACCORDINGLY, the application is allowed in part. Questions Nos. 1 and 3 alone shall be referred but not question No. 2.;