K.C.Agarwal, CJ. - (1.)This is a reference made at the instance of the Commissioner of Income-tax (Central-II), Calcutta, referring the following two questions of the Income-tax Appellate Tribunal, dated December 3, 1990 ;
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that amount paid in excess of maximum calculated under the provision of Section 36(1)(ii) of the Income-tax Act, 1961, on the ground that the amount would be treated as customary bonus and deductible under Section 37(1) of the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the cost of stamp paper, registration expense and legal expenses totalling Rs. 1,071 incurred by the assessee as per agreement of lease deed in acquiring the sub-lease right from Sri Mohan Lal Goenka in the property at 11, Dover Park, Calcutta, which was subsequently transferred in favour of the Syndicate Bank for a consideration of Rs. 40 lakhs cannot be considered as the cost of acquisition of the sub-lease right ?"

(2.)The brief facts of this case are that the respondent, Messrs. Octavious Steel and Co. Ltd., which is an Indian resident company had been a monthly tenant in the premises No. 11, Dover Park, Calcutta, since 1952. The property belonged to Sri Binoy Kr. Paul. The above tenancy was acquired on the basis of an oral agreement and the respondent did not pay premium, pagri or any other sum at the time of taking possession of the premises when it became the monthly tenant. The landlord subsequently leased out the premises to one Sri Mohan Lal Goenka for 99 years on June 20, 1973, for a monthly rent of Rs. 600 with effect from July 1, 1973, till June 30, 2072. The respondent-company continued to be in possession of the premises as tenant in spite of the above lease. Subsequently, on July 8, 1980, Sri Goenka wanted the continued possession of the respondent as monthly tenant to be reduced in writing and, accordingly, a sub-lease deed was executed and the cost incurred for execution of the sub-lease deed were as follows : Rs. (1) Cost of stamp paper 516 (2) Registration charges 229 (3) Legal expenses 326 ------- 1,071 -------
(3.)As per the terms of the sub-lease deed, the respondent acquired the sub-lease right at a rent of Rs. 700 per month for a period of nine years with option to renew the lease for a further period of nine years. Even at the time of execution of this lease deed, no premium or salami or pagri was paid by the respondent to Sri Goenka or to any other party. On August 28, 1981, Sri Goenka transferred his residuary leasehold rights to Tinnevelly Tuticorin Tea and Investment Co. Ltd. for a consideration of Rs. 40,000 subject to the leasehold rights of the respondent. On June 22, 1982, Tinnevelly Tuticorin Tea and Investment Co. Ltd., purchased the reversionary rights of Sri Benoy Kr. Paul in the premises for a consideration of Rs. 8 lakhs which transaction did not affect the tenancy or the rights of possession of the respondent. That company by a deed of conveyance again transferred its reversionary rights to the Syndicate Bank for a consideration of Rs. 10 lakhs. Soon after this the said bank and the respondent-company entered into an agreement as a result of which the leasehold/tenancy and the possessory rights of the respondent-company in the premises were transferred and assigned to the bank for a consideration of Rs. 40 lakhs as per a deed of assignment dated July 11, 1983.
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