DIPAK KUMAR SEN, J.

( 1 ) GOBIND Sugar Mills Ltd. , the assessee, had been carrying on business of running a sugar mill. Under a deed of lease executed on the 30th August, 1969, it obtained a lease of another sugar factory at Matihari in consideration of an annual rental of not less than Rs. 25 lakhs for a period of five years. For the execution of the said deed, the assessee had to incur some expenditure on account of stamp fees, registration charges, solicitor's fees, etc. , which aggregated Rs. 54,824. In the assessment year 1971-72, the relevant previous year ending on the 30th June, 1970, the assessee in its assessment to income-tax claimed deduction of the said amount as a revenue expenditure incurred for the purpose of business. The ITO rejected the said claim on the ground that the same had been incurred for acquiring the right to run a factory on lease and, therefore, the expenditure was of a capital nature.

( 2 ) BEING aggrieved, the assessee preferred an appeal. The AAC, following a decision of the Supreme Court in the case of India Cements Ltd. v. CIT [1966] 60 ITR 52, held that the expenditure in question had been incurred by the assessee for the use of a property under a leasehold for a limited period of time and that such expenditure had been incurred to obtain the use of the premises and to facilitate the carrying on of the business of the assessee. The AAC, accordingly, upheld the contentions of the assessee.

( 3 ) THE revenue preferred a further appeal before the Tribunal. It was contended in the appeal that an expenditure incurred for acquiring a right to run the said sugar mill for the said period of five years was definitely on capital account and that a capital asset in the form of the assessee's right to run and exploit the said factory for the said period had come into existence under the said lease. Accordingly, the expenditure incurred on that account was submitted to be in the nature of capital expenditure. The decision of the Supreme Court in the case of India Cements Ltd. [1966] 60 ITR 52 was sought to be distinguished on the ground that the expenditure in that case had been incurred for the purpose of obtaining a loan. An earlier decision of the Supreme Court in Assam Bengal Cement Co. Ltd. v. CIT [1955] 27 ITR 34 was cited for the proposition that the expenditure incurred for the initial outlay in the setting up of a business or a venture could not be said to be on revenue account.

( 4 ) IT was contended on behalf of the assessee, on the other hand, that it was already running a sugar mill and, therefore, the said lease was entered into in the course of the assessee's existing business. It was contended further that the assessee did not acquire any enduring right under the said lease but was only given a right to run a factory for a period of five years. The decision of the Supreme Court in the case of India Cements Ltd. [1966] 60 ITR 52 was reiterated before the Tribunal. The Tribunal found as follows: (a) Subsequent to the said lease of the factory at Matihari, the assessee had not acquired any other sugar factory for its business. (b) The said expenditure of Rs. 54,824 was a sum spent once for all and was not a recurring payment. (c) Therefore, the expenditure of the said sum of Rs. 54,824 stood on the same footing as payment of a premium and was an outright payment made for bringing into existence the document.

( 5 ) ON the reasons as aforesaid, the Tribunal set aside the order of the AAC and upheld the order of the ITO holding that the sum of Rs. 54,824 spent was a capital expenditure.

( 6 ) ON an application of the assessee under Section 256 (1) of the I. T. Act, 1961, the Tribunal has drawn up a statement of case and has referred the following question for the opinion of this court as a question of law arising from its order:"whether the Income-tax Appellate Tribunal was justified in law in holding that law charges incurred for the purpose of execution of temporary lease for 5 years

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