Laik, J. - (1.) This is an application for leave to appeal to the Supreme Court of India. The Assessee Company was at all material times carrying on business of winning mica and selling the same after refinement. In course of business, it entered into several contracts of leases. One of such lease is dated February 12, 1936 made between Madan Lal and others, Mica Merchants of Giridih, on the one part and the Assessee Company on the other part. A copy of the said lease was made an annexure A to the statement of the case. The said lease was for a term of 5 years commencing from 7th of March, 1935. Under the terms of the lease the Assessee covenanted to pay to the superior landlords of the lessors, either direct or through the lessors, the rents and royalties payable by the lessors to their landlords. In the year of account corresponding to the assessment year 1947-48, a sum of Rs. 28,726 was paid by the assessee company to the superior landlord towards rent on account of the lease.
(2.) The Assessee contended that the payment of the annual rent was in the nature of a revenue expenditure. The Department on the other hand, contended that the said payment was in the nature of capital.
(3.) The Income-tax Officer, Company District IV, Calcutta, by his order dated March 19, 1082 assessed the assessee of his income including the mining rent, in the sum of Rs. 26,726 to tax treating the same as capital expenditure Consequently there was an assessment as excess profit tax.;