P.B. MUKHARJI, J.

1. This income-tax reference under s. 66(1) of the IT Act raises the following question of law for decision :

"Whether, on the facts and circumstances of the case, the sum of Rs. 2,17,182 claimed as an expenditure on renovation was allowable as a deduction in computing the business income of the assessee-company ?"

2. The facts briefly are as follows :

The assessee-company, Humayun Properties Ltd., carries on business of cinema exhibitors. Amongst other houses, it is the owner of the two well-known show houses in Calcutta, called the Light House and the New Empire. The accounting year ended on 30th Sept., 1949. During that year of account the assessee incurred certain expenses which it called as "renovation expenses". Under the head "New Empire renovation", the expenditure amounted to Rs. 91,994-10-9 and under the head "Light House renovation", the expenditure amounted to Rs. 1,48,318. The ITO allowed 10% of the claim as current repairs and disallowed Rs. 82,796 for new Empire renovation and also disallowed Rs. 1,34,386 as Light House renovation. The total of these disallowed renovation expenditure amounted to Rs. 2,17,182. The AAC upheld the ITO's disallow