Vijayvargiya, J.

1. The facts giving rise to this application under Section 256(2) of the Income Tax Act, 1961, are as follows :

For the assessment years 1964-65 and 1965-66, the applicant-assessee, inter alia, claimed deduction of Rs. one lakh for each year as revenue expenditure being the amount contributed by the applicant to the State of Kerala for the construction of a road from Calicut Railway station to Mavoor where the pulp factory of the assessee was situated. The ITO disallowed the deduction on the ground that it was in the nature of capital expenditure. Similarly, theO disallowed the claim of the assessee for the deduction of Rs. 5,125 and Rs. 3,481 in the assessment year 1965-66, contributed by the assessee towards the cost of construction of tube-wells in the villages in the vicinity of the assessees factory in the State of Kerala on the ground that it was in the nature of capital expenditure. The order of theO in that regard was maintained by the AAC as also by the Income Tax Appellate Tribunal. The applicant submitted an application to the Tribunal for referring several questions of law arising out of the order of the Tribunal. The Tribunal referred certain questions of law for the opinion of this court but declined to refer questions arising out of the above two matters. The applicant has, therefore, submitted this application.

2. Having heard the learned counsel for the parties, we have come to the conclusion that the following questions of law do arise out of the order of the Tribunal.

" 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amount of Rs. 1 lakh contributed by the assessee to the Government of Kerala for the construction of road in each of the assessment years 1964-65 and 1965-66 was in the nature of capital expenditure and in not allowing the deduction of such expenditure on that ground

2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amount of Rs. 5,125 and Rs. 3,481 contributed by the assessee to the Government of Kerala towards the cost of contraction in the assessment year 1965-66 was in the nature of capital expenditure and in not allowing the deduction of such expenditure on that ground "

3. The application is, therefore, allowed. The Income Tax Appellate Tribunal is directed to state the case and refer the aforesaid question of law arising out of the order of the Tribunal for the opinion of this court. In the circumstances of the case, the parties shall bear their own costs of this application.