COMMISSIONER OF INCOME TAX Vs. BANSHIDHAR SEWBHAGAWAN AND CO

JUDGEMENT

(1.) THIS is a reference under S. 256(1) of the IT Act, 1961, hereinafter referred to as "the Act" made by the Tribunal, hereinafter referred to as "the Tribunal". The following question of law has been referred : "Whether, on the facts and in the circumstances of the case, the Tribunal was correct, on a proper interpretation of the terms of the lease deed dated March 23, 1961, and the agreement dated April 6, 1961, in holding that the payment made by the assessee represented revenue expenditure and, as such, in allowing the assessee's claim to the tune of Rs. 6,750 only -

(2.) THE facts of the case may briefly be stated as follows : The case relates to the asst. year 1962 -63. The assessee took lease of the Ahmeddy Tea Estate by a deed of lease dated March 23, 1961, for a period of 22 years beginning from January 1, 1961. The total payment to be made during the period of 22 years is Rs. 1,48,499. As the lessors had some liabilities the assessee made initial payment of Rs. 80,999 and the balance is to be paid in the following manner : (1) First five years nothing will be paid. (2) Thereafter, for seven years the lessors will get annually Rs. 2,500 -total Rs. 17,500. (3) Thereafter, for the remaining period of ten years, the lessors will get annually Rs. 5,000 -total Rs. 50,000.

(3.) THE payment of Rs. 80,999 was divided into five years and the assessee claimed Rs. 16,200 as lease rent. The ITO allowed a sum of Rs. 2,509 and disallowed the balance considering that a substantial portion of Rs. 1,48,499 was capital expenditure in nature.