Suhas Chandra Sen, JJ. - (1.) At the instance of the CIT the two following questions of law have been referred to this court under Section 256(1) of the I.T. Act, 1961 : "1. Whether, on the facts and in the circumstances of the case, and on a correct interpretation of the agency agreement dated March 29, 1963, and in particular Clause 10 thereof and having regard to the relevant provisions of the Motor Vehicles Act, the Tribunal was correct in holding that the assessee-firm was the owner of the five new vehicles acquired at the cost of Rs. 1,88,464 and the assessee was entitled to depreciation in respect of the expenditure on the acquisition of those buses ?
(2.) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amounts received by the assessee from the persons to whom it sub-let the buses in the previous years relevant to the assessment years 1964-65, 1965-66, 1967-68, 1968-69 and 1969-70 could be construed as premiums for parting with a capital asset and, in that view, holding that the said amounts were capital receipts and not revenue receipts in the assessee's hands?" 2. The facts relevant for the purpose of this case are as follows :
(3.) One group of Khannas, namely, Aminchand Khanna, Indra Kumar Khanna, M.R. Khanna and Vijoy Kumar Khanna, took on hire 23 buses from M/s. Salkia Transport Agency Pvt. Ltd. (hereinafter described as " the company ") under an agreement dated March 29, 1963. The said Khannas formed themselves into a partnership styled as M/s. Salkia Transport Associates with the object of plying the aforesaid 23 buses. Salkia Transport Associates, the assessee herein, replaced five of the worn out buses with five new buses. Clause 10 of the agreement between the parties provided : "The agents shall, during the continuance of the agency, keep the motor vehicles in good repaired running condition complete with all necessary accessories, tools and implements which they have received from the owners as clearly described in schedule C attached hereto and, if necessary, shall replace one or more or all of the said motor vehicles at their own cost. But they shall always keep the owners informed about all replacements. The vehicles so replaced will be the property of the agents.";