P L D 1967 Dacca 500 (PLP)

HASAN, J ‑Gulistan Cinema was constructed in 1953, by M/s. Gulistan Film Corporation and let out in the same year to M/s. Gulistan Cinema Company the assessee. While the Assessee was going to be assessed for the assessment year 1960‑61, by the Income‑tax Officer, the Assessee claimed deduction of Rs. 20,803 under the head "Cinema maintenance". The item of cost included the cost of Mosaic flooring of the Cinema Hall amounting to Rs. 20,

803. The Income‑tax Officer rejected the claim of the Assessee on the ground that the Assessee being a tenant acid not the owner of the building, the Assessee firm was not required to make any capital expenditure on this building, whereupon the Assessee preferred an appeal to the Appellate Assistant Commissioner of Income- tax. The Appellate Assistant Commissioner allowed deduction to the tune of Rs. 9,240 on the GROUND that the said sum was spent for oil painting of the hall but disallowed the costs of the mosaic flooring amounting to Rs. 11,563 on the ground that the mosaic floor was of a permanent nature and accord ingly the Income‑tax Officer rightly took it as capital expenditure and disallowed the same. As against that, the Assessee, not being satisfied with the order of the Appellate Assistant Commissioner, filed an appeal before the Income‑tax Appellate Tribunal, Dacca Bench, Dacca. The Tribunal allowed the appeal of the Assessee in full hold ing that the sum spent by the Assessee for mosaic constituted current repairs in terms of section 10(2)(v) of the Income -tax Act. This decision of the Tribunal necessitated for the Income‑tax Commissioner to file an application under sec tion 66 (1) of the Income‑tax Act for reference to this Court for its opinion on two questions which according to the applicant were questions of law namely: "(1) Whether, on the facts and in the circumstances of the case the Appellate Tribunal was right in the conclusion reached by it that the expenditure of Rs. 11,563 representing cost of mosaic flooring was allowable either under section 10(2)(v) or under section (10)(2)(xvi) despite clear provisions under section 10(2)(ii) for deductions on account of repairs where the assessee is the tenant only of the premises and has undertaken to bear the cost of such repairs. (2) If the answer to the first question is in the negative, whether the Appellate Tribunal was right in deleting the dis allowance of Rs. 11,563." The Tribunal rejected the application on the finding that those two questions did not arise out of the order passed by the Tribunal. Being frustrated, the Commissioner of Income‑tax moved this Court under section 66 (2) of the Income‑tax Act and this Court issued a Rule in the following terms: "Let a Rule issue calling upon the respondent to show cause why the Income‑tax Tribunal, Dacca Bench, Dacca, should not be directed to refer the question of law as framed in paragraph 13 of the petition for decision, as prayed for, or such other or further order or orders passed as to this Court may seem fit and proper. Let a copy of this Rule be served on the Income‑tax Tribunal." Now the question before us is whether these two questions arise out of the order of the Tribunal. It is submitted by the learned Advocate for the petitioner that the order of the Tribunal will go to show that these two questions arise out of the order in question. While on the other hand, it has been contended by the learned Advocate for the respondents that the observation as per paragraph 7, in relation to section 10(2)(ii) was not called for as no issue was raised, discussed and decided by the Tribunal and as such those two questions do not arise out of the order of the Tribunal. As regards whether and when a question arises out of an order or not, the learned Advocate for the respondent has relied on the case of the Commissioner of Income‑tax, Bombay v. Scindia Steam Navi gation Co. Ltd. ((1961) 42 I T R 589), the case of Ramnath Ram Prasad v. Commissioner of Income‑tax U. P. ((1964) 54 I T R 777) and the case of A. Abboy Chetty & Co. v. Commissioner of Income‑tax Madras ((1947) 15 I T R 442). It is not necessary for us to refer to all these cases, a9 in our view the observation about when question arises out of an order in the first case will be sufficient for the disposal of the contentions of both the learned Advocates. The Supreme Court of India summed up the cases referred to before it and observed:‑ "(1) When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order. (2) When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order. (3) When a question is not raised before the Tribunal but the Tribunal deals with it, that it will also be a question arising out of its order. (4) When a question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the findings given by it." Mr. Afzalul Huq the learned Advocate for the petitioner has not disputed the soundness of the above proposition. We endorse the above view of the Supreme Court of India. Now, having in view the above, we are to see whether these two questions arise out of the order of the Tribunal in question. From the statement of facts and also finding of the Tribunal, it appears that the Assessee is a tenant and not the owner of the Cinema Hall. Now the question is whether the Tribunal was called upon to decide the application of the provisions of section 10(2)(ii) of the Income‑tax Act in the facts and circum stances of the case. We have already observed that according to the submission of the learned Advocate for the respondent these questions were never raised, argued or decided by the Tribunal. But it is very difficult to accept this submission in view of the following sentence in paragraph 7 of the order of the Tribunal: "We may also observe that the assessee has not come up for the claim of deduction under section 10(2)(ii)." It is contended on behalf of the respondent that this was nothing but a mere passing observation but not an observation in connection with the issue raised. We are unable to accept this contention. The Assessee claimed deduction under sec tion 10(2)(v) and the Income‑tax Authority contended that section 10(2)(v) in the facts and circumstances of the case, bad no application to the present case, rather, it could come under section (10)(2)(ii). Then again such contention was not raised before the Tribunal by the Income‑tax Authority then there could not have been any observation like "We may also observe that the assessee has not come up for the claim of deduction under section 10(2)(ii)". If the whole order is taken into consideration, then it seems to us that the Tribunal was of the view that section (10)(2)(ii) could have application if the Assessee had claimed relief under that section and not otherwise. And as relief was claimed under section 10(2)(v) or B 10(2)(xvi), section 10(2)(ii) could have no application though pleaded in defence. So in our opinion whether in the facts and circumstances of the case, section 10(2)(ii) is applicable or not is a question of law arising directly out of the order passed by the Tribunal. We accordingly make the Rule absolute and direct the Tribunal to state the facts and refer the two questions involved in this case for the opinion of the High Court. Having regard to the facts and circumstances of the case, we direct the parties to bear their own costs. ABDUS SUBHAN CHOUDHURI, J.‑‑I agree. S. Q. Rule made absolute.