- (1.) THE Tribunal, Allahabad has referred the following questions of law relevant to the asst. yrs. 1974 -75 and 1976 -77 for opinion of this Court : "Whether on the facts and in the circumstances of the case, the Tribunal was right in directing that the value of the assessee's leasehold rights in the building be considered in the computation of capital employed for the purpose of allowing relief under s. 80J of the IT Act, 1961 -
(2.) AT the instance of the Department, the Tribunal has also referred for the opinion of this Court the following questions of law : "1. Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the making of various preparations of food and creation of controlled atmosphere could not be recorded as a 'manufacture or production of any Article or thing' within the meaning of s. 32A(2)(b) of IT Act, 1961 ? 2. Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee was not entitled to investment allowance under s. 32A(1) r/w s. 32A(2)(b) of IT Act, 1961 on generator installed for the purpose of its business -
(3.) THE dispute relates to the asst. yrs. 1974 -75 and 1976 -77. The assessee is a company and is running hotel business. It has taken a building on lease for a fixed period of 20 years for which it had been paying rent of Rs. 40,000 per annum. A copy of the said lease deed has been annexed with the statement of the case. It is provided therein that the said lease can be terminated by the lessor in case of default of breach committed by the lessee in payment of rent or for not observing the conditions or covenant claimed in the deed. It claimed before the ITO that the assessee is also entitled for relief under s. 80J of the IT Act of a sum of Rs. 36,000 calculated at the rate of 6 per cent an amount of Rs. 6 lakhs which according to the assessee represented the capitalized value of leasehold rights of the hotel building. The said claim was not accepted by the ITO nor by the CIT(A). They examined the lease deed in depth and reached to the conclusion that the assessee has not employed any capital to obtain the lease and on the lease amount/rent is being treated as revenue expenditure. It was further found that the assessee was not the owner of the building, the above amount could not be included in the computation of capital employed in the business. The Tribunal held that the right of the assessee is lessee's right. It is an asset. It directed the ITO to work out the yield which the said lease property might yield to the assessee if he had sub -leased it to others for the purposes of commercially exploiting it. The difference between the said yield and the rent namely Rs. 40,000 per annum would indicate the yield potential of the said property to the lessee for a period of 20 years on existing terms. Its present value will have to be ascertained by applying appropriate table of valuation and if necessary the ITO may take the help of the Valuation Officer to find out the assessee's interest in the said property. Whatever be its value, it would be included while computing the capital employed in the hotel business. In this factual background the question No. 1 reproduced above was referred by the Tribunal, at the instance of the assessee.;