MAHAJAN, J.

1. The Income-tax Appellate Tribunal (Delhi Bench) has referred the following question of law for our decision under section 66(1) of the Indian Income-tax Act, 1922 :

"Whether the expenditure of Rs. 16,323 incurred by the assessee for putting up wooden panels in the lounge and on the staircase and the restaurant was expenditure of a capital nature ?"

2. The dispute relates to the assessment year 1956-57.

3. The assessee is the lessee of the cinema building known as "Regal Theatre" in Connaught Circus, New Delhi. The lease deed was executed on the 14th July, 1949, and was duly registered under the Indian Registration Act. Only three clauses of the lease-deed have some relevancy and, therefore, they are set out below :

"6. That the lessee shall not make any additions or alterations whatsoever to the premises and shall not sub-let the premises or any part thereof without the consent in writing of the lessor obtained previous to the sub-letting......

8. That the lessee will keep the premises in good and healthy condition and at the expiry of the lease or sooner determination thereof, the lessee will deliver possession of the premises with all furniture, fixtures, f