1. - This is a reference by the Income-tax Appellate Tribunal, Bombay Bench "B", under section 66(1) of the Indian Income-tax Act, 1922 (hereinafter referred to as the Act). The questions referred to by the Appellate Tribunal, are as follows:

"(1) Whether, on the facts and in the circumstances of the case, the prospecting licence fee of Rs. 3,200 is allowable as revenue expenditure?

(2) Whether, on the facts and in the circumstances of the case, the appropriate part of Rs. 1,53,800 was allowable as revenue expenditure?"

2. The reference has arisen out of the following facts:

The applicant before the Tribunal, R.B. Seth Moolchand Suganchand (Mining Department), Udaipur, hereinafter referred to as the assessee, was working certain emerald mines in the Udaipur area where the head office was situated. The relevant assessment year under reference was 1952-53. At the head office of the assessee, the accounts are closed on October 31, 1951, and at the branch on March 31, 1952, and those are the relevant previous years. During the relevant year, the assessee applied for certain new licences, for which it incurred an expenditure of Rs. 5,694 which included prospecting licence fee of Rs