SABYASACHI MUKHARJI, J.

( 1 ) UNDER Section 256 (1) of the I. T. Act, 1961, this reference has been made for the year 1960-61. It appears that on the 25th January, 1962, the assessee wrote a letter to the assessing ITO explaining therein, according to the assessee, the management charges paid by the assessee to the parent company in London. On the 5th March, 1962, the assessee-company by a letter replied to the query made by the ITO at the time of the original assessment for furnishing details regarding the various items including the London office management expenses. The company in the said letter referred to its earlier letter dated 25th January, 1962, which we have mentioned hereinbefore. On the 17th March, 1962, the original assessment was made by one Sri G. P. Gupta, who was, at that time, the ITO and in the said order the total income computed was Rs. 3,62,36,092. Subsequently, the Rajasthan High Court in the case of CIT v. Gotan Lime Syndicate [1964] 51 ITR 533, a decision to which we will presently refer in detail, held that the sum paid, in that case, by the assessee every year was in consideration of royalty and the same expenditure, was held to be a capital expenditure

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