The court's decision was influenced by settled law and the findings of fact made by the Tribunal, leading to the conclusion that the addition of deemed dividend was unsustainable and that the payment represented a capital expenditure.

( 1 ) TWO questions of law have been referred by the Tribunal One is at the instance of the assessee and the other one is at the instance of the Revenue. The first question referred at the instance of the Revenue is as follows :"whether, on the facts and in the circumstances of the case and on a correct interpretation of Section 2 (22) (e) of the Income-tax Act, 1961, the Tribunal is right in holding that the addition of Rs. 5,75,154 made in the assessment for the assessment year 1971-72 as deemed dividend is unsustainable and in that view deleting the same from the income of the assessee for that assessment year ?"

( 2 ) THE second question is referred at the instance of the assessee and is as follows :"whether, on the facts and in the circumstances of the case and on a true construction of the deed of sub-lease dated November 14, 1969, the Tribunal was justified in law in holding that the sum of Rs. 11,00,000 payable by the assessee in four instalments to the sub-lessor, Macneill and Barry Ltd. , represented the purchase price of the right to enjoy the property and as such was a capital expenditure and in that view in holding that the payment of Rs. 2,67,000 by the assessee to Macneill and Barry Ltd. during the year, as the second instalment, was a capital expenditure and was, therefore, not an allowable deduction ?"

( 3 ) SO far as the first question is concerned, the law is well settled by the judgment of the Supreme Court in the case of Rameshwarlal Sanwarmal v. C1t [1980] 122 ITR 1 and also by the Division Bench of this court in the case of ITO v. Chandmull Batia [1978] 115 ITR 388. The first question raised at the instance of the Revenue is answered in the affirmative and against the Revenue, So far as the second question is concerned, in view of the findings of fact made by the Tribunal in the statement of the case, the answer to the question appears to us to be obvious and we answer the question in the affirmative and against the assessee. Each party will pay and bear its own costs.