Y.R.Meena, J. - (1.) In this reference application, the Tribunal was directed to refer the following questions for the opinion of this court : "1. Whether, the finding of the Tribunal relating to the allowance of deduction of business expenditure of Rs. 36,000 as and by way of payment of alleged rent is based on any relevant evidence or otherwise perverse ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing the share loss of Rs. 49,210 in the purchase and sale of share ?"
(2.) The assessee is an investment company. It derives income from interest and dividend. It is also engaged in purchase and sale of shares. Before the Assessing Officer, the assessee, inter alia, claimed deduction of Rs. 36,000 being rent in respect of the premises at Flat No. 84, at 6C, Middleton Street, Calcutta. The payment was made to one Nitin Dhawan, who is stated to be one of the directors of the assessee-company, up to February 16, 1981. Thereafter he became an employee of the assessee-company. The company has hired the premises on rent from June 1, 1981, in terms of a registered agreement to the effect that the assessee had given an advance of Rs. 1,08,000 to the said Dhawan and that amount was to be adjusted against the rent, that is, Rs. 36,000 per year.
(3.) The Income-tax Officer has disallowed the rent on the ground that he has deputed an inspector to enquire as to whether any sign board of the assessee-company was there and whether the premises are being used by the assessee for its business purposes. The report of the inspector was adverse to the case made out by the assessee. Therefore, the claim of rent of Rs. 36,000 paid each year was disallowed.;