S.K. Desai, J.
1. The question referred to us by the Income-tax Appellate Tribunal reads as follows:
'Whether, on the facts and in the circumstances of the case, the assessee was entitled to relief under section 15 C of the Indian Income-tax Act, 1922, for the assessment years 1960-61 and 1961-62, and under section 84 of the Income-tax Act, 1961, for the assessment years 1962-63 and 1963-64 ?'
2. We are concerned in this reference with four assessment years, namely, 1960-61, 1961-62, 1962-63 and 1963-64. It is obvious that the first two of these four years will be governed by the Indian I.T. Act 1922, and the later two years by the I.T. Act, 1961.
3. It is unnecessary to give a detailed order inasmuch as the Tribunal it appears to us, has found in favour of the assessee on a limited footing, which footing is not in accordance with the law as declared by this High Court.
4. The question being considered was, was the benefit available to the assessee under s. 15C of the Indian I.T. Act, 1922, for the first two years, and under s. 84 of the I.T. Act, 1961, for the later two years. The new industrial undertaking in respect of which the benefit of these sections was claimed had been started by the assessee in an old building, and the title, if indeed it can be considered to be such, of the assessee to the premises has been indicated in detail by the AAC in para. 4 of his order. The owners of this building were one E. C. Pereira and Mrs. D. C. Pereira. On May 5, 1958, they entered into an agreement with M/s. Garware Plastics Private Ltd. The amount payable by the company to the owners was Rs. 1,500 per month, which was subsequently enhanced to Rs. 4,000 per month. In 1958, permission had been sought by the company from the landlords to 'sub-let' the premises. By a letter such permission was granted. These premises, for which M/s. Garware Plastics Private Ltd., were paying to Pereiras Rs. 1,500 per month, were given to the assessee on Rs. 2,000 per month. According to the AAC 'a perusal of this document clearly shows that the premises have been taken on leave and licence basis by M/s. Garware Plastics Private Ltd., who, in turn, sub-let the same to the appellant company. Thus, the appellant has not acquired any right over the property'. According to the AAC, further, 'thus the scheme under which the appellant occupies the premises amounts to leave and licence basis.'
5. The AAC thus found in favour of the assessee, and it was the ITO who carried the matter in further appeal to the Tribunal. The Tribunal did not apply its mind to the question whether or not the assessee occupied the premises on leave and licence basis as suggested by the AAC, because, in its view, the assessee, even if it was a sub-lessee, could not be denied the benefit of s. 15C of the Act of 1922 or s. 84 of the Act of 1961, since a lease or a sub-lease in the view of the Tribunal did not constitute a transfer.
6. It is pointed out by Mr. Joshi that in Capsulation Services Pvt. Ltd. v. CIT : 91ITR566(Bom) , the word 'transfer' occurring in these two sections has been understood in a larger sense as including within its ambit all ordinary modes of transfer, namely, sale, mortgage lease, gift and exchange. Thus, the legal basis of the decision of the Tribunal runs counter to the law as laid down by the Bombay High Court in Capsulation Services Pvt. Ltd's case : 91ITR566(Bom) .
7. Mr. Vyas, on behalf of the assessee, has drawn our attention to the fact that in CIT v. Bayer Agrochem Ltd. (Income-tax Reference No. 7 of 1967, decided on November 10, 1976) (see p. 240 infra), it has been held that if the premises are held on leave and licence, then the view taken in Capsulation Services Pvt. Ltd.'s case : 91ITR566(Bom) was not applicable. Since the Tribunal has not gone into this question, it will be necessary for it to go into this aspect of the matter and decide whether or not there was any transfer of the premises to the assessee when it started its new industrial undertaking. For this purpose, it will have to ascertain the nature of the 'occupancy title' of the assessee. If the assessee is a lessee or a sub-lessee as ordinarily understood, then this case will be governed by the decision of this court in Capsulation Services Pvt. Ltd.'s case (I.T. Reference No. 7 of 1967) (see p. 240 infra) will be required to be applied.
8. There are also two further questions which may be required to be considered by the Tribunal. We are concerned in the two later years with the applicability of s. 84 of the I.T. Act, 1961, and the assessee will be entitled to rely on the Explanation to the said section. The Tribunal will thus be required to consider whether the said section, give to the assessee the benefit of the Explanation if it is entitled thereto.
9. For the two earlier years also, similar considerations have been applied by the court, although there is no Explanation nor the figure of 20% to be borne in mind. All these aspects have not been determined by the Tribunal in its order from which the reference arises, and all these aspects will be required to be gone into.
10. The question referred to us is a very general question to which cannot be given a very simple answer. We answer it as follows: The Tribunal was, it appears to us, in error in taking the view that it took, namely, that the utilisation of the building belonging to the Pereiras by the assessee in its new industrial undertaking made no difference to the availability of the benefit under s. 15C of the Act of the Act of 1922 or s. 84 of the Act of 1961. The Tribunal is required to reconsider the question in accordance with the points indicated earlier in this judgment.
11. The parties, however, are directed to bear their own costs of the reference.