Satyanarayana Rao, J.-The question raised in this reference is a very short one and does not present much difficulty. The question is:

“Whether the payment of Rs. 5,000 by the assessee to Mr. Sambamurthi was capital expenditure”.

The assessee was a registered accountant. He was employed by one Mr. Sambamurthi who was also doing similar business at Karaikudi. After some time the assessee was taken as a working partner of the Karaikudi branch where he worked till 31st March, 1946. On 1st April, 1946, under an agreement evidenced by a letter addressed by the assessee to Mr. Sambamurthi and dated 28th May, 1947, the assessee became the owner of the Karaikudi branch. The letter which evidences the agreement between Mr. Sambamurthi and the assessee states that the Karaikudi office became the sole concern of the assessee with effect from 1st April, 1946 and the goodwill was to be returned at half the net profits (book profits) of the Karaikudi office for the three years ending with 31st March, 1949, to be limited to Rs. 5,000 for each of the three years, if half the profits in any year exceeded Rs. 5,000 and to the actual amount if half the profits was below Rs. 5,000. The third clause in t

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