( 1 ) THE following two questions have been referred for decision under Section 66 (1) of the Indian Income-tax Act, 1922:"1. Whether, on the facts and in the circumstances of the case, the amount of Rs. 6,991 is allowable as a deduction in the assessment year 1959-60? 2. Whether, on the facts and in the circumstances of the case, the amount of Rs. 15,275 is allowable as a revenue expenditure?"the facts raising these questions may be shortly stated: The assessee is a registered firm and the owner of a cinema theatre. The land on which the theatre was constructed belonged to another firm. It was taken on lease for a period of 10 years commencing from 1-5-1940, on an annual rent of Rs. 750. The assessee did not vacate the land at the expiry of the lease period with the result that the managing partner of the lessor firm brought a suit in ejectment with a further claim for mesne profits in the Court of the District Judge Krishna at Masulipatam. The asses-see thereupon started negotiations with the partners of the lessor firm. He was successful in obtaining a sale deed for 98 out of 160 shares in the land. He entered into an agreement of sale with regard to 39 shares more