Sabyasachi Mukherjee, J. - (1.) In this case, under Sec. 66(2) of the Indian Income -tax Act, 1922, the Tribunal as directed has referred the following questions for the assessment year 1959 -60: (i) Whether, on the facts and in the circumstances of the case, the Tribunal was competent to go behind the agreement for sale dated October 17, 1958 and fix a valuation of its own in the way it has done. (ii) Whether, on the facts and in the circumstances of the case, the Assessee was properly assessed on Rs. 2 lakhs as profits under the proviso of Sec. 10(2)(vii) of the Indian Income -tax Act, 1922. (iii) Whether, on the facts and in the circumstances of the case and on a correct interpretation of the agreement for sale, the Tribunal was justified in law in holding that the Assessee company has used the building, plant and machinery of Glencoe Tea Estate for its business during the accounting year 1958. (iv) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the items enumerated in para. 9 of its order were not plant and machinery wholly used for the Assessee's business.
(2.) As mentioned before the reference is in relation to the assessment year 1959 -60 for which the relevant previous year ended on December 31, 1958. The Assessee is a sterling company incorporated in the United Kingdom and owned several tea estates in Assam. By an agreement for sale dated October 17, 1958, it had agreed to sell one of its own estates known as new Glencoe Tea Estate to a company called New Glencoe Company Ltd. which was incorporated on March 20, 1958. The negotiations which resulted in the agreement were conducted on behalf of the purchaser by two of its promoters who had paid Rs. 58,801 as earnest money on February 4, 1958. The agreed price for the sale of the estate was Rs. 11,75,001. The balance of the purchase price being Rs. 11,16,200 was paid on October 17, 1958. We shall refer later to the terms of the agreement for sale.
(3.) In the course of the assessment for the assessment year 1959 -60, the relevant previous year being the calendar year 1958, the Assessee claimed a loss of Rs. 91,298 under Sec. 10(2)(vii) of the Indian Income -tax Act, 1922. The Income -tax Officer called for the correspondence as he was of the opinion that with the various import restrictions and the overall rise in the prices it was extraordinary that the company should suffer a loss on the sale of its plant and machinery especially when like most of the sterling companies the Assessee had also spent a good deal of money on the proper upkeep and maintenance of the new plant, machinery etc.;