JUDGMENT JUDGMENT This reference has been made under section 256(1) of Income-tax Act, 1961 ("the Act"), by Tribunal, Jaipur Bench, Jaipur. Farasol Ltd. ("the assessee") is foreign company having its management and control outside India. By order of Central Board of Direct Taxes dated December 5, 1964, assessee has been treated as company for purpose of Act. assessee submitted tender for shallow drilling in Jaisalmer area to Oil and Natural Gas Commission. formal intimation of acceptance of said tender was given to assessee by Oil and Natural Gas Commission on October 11, 1963. formal contract was executed on February 17, 1964, and actual drilling operations were started in month of December, 1964. As special case, assessee was permitted by Company Law Board to prepare its accounts for period of 15 months covering period from September 10, 1964, to December 31, 1965. assessee submitted its return for aforesaid period relevant to assessment year 1966-67 wherein it declared net loss of Rs. 5,84,746. In said return, assessee claimed deduction of sum of Rs. 2,36,007 paid by it as interest to banks outside India, i.e., in Paris, on loans taken by assessee. assessee also claimed deduction of sum of Rs. 3,50,172 on account of expenses. assessee also claimed depreciation on various items of machinery and furniture. Income-tax Officer, Jaipur, vide his assessment order dated December 30, 1967, assessed assessee on total income of Rs. 9,67,427. Incometax Officer disallowed deduction of Rs. 2,36,007 towards interest claimed by assessee on ground that said interest had accrued to foreign banks outside India and assessee was liable to deduct tax under Act and in view of provisions of section 40(a)(i) of Act, deduction of said interest could not be allowed to assessee. Income-tax Officer also disallowed expenses to extent of Rs. 3,26,794 which are related to period prior to February 10, 1964, and also disallowed expenses of Rs. 19,126 claimed by assessee on account of stores consumption on ground that said expenses had also been incurred before February 10, 1964. In matter of depreciation, Income-tax Officer held that assessee could not claim depreciation for period of more than 12 months even though some of assets of assessee were worked for more than one full year and he allowed depreciation on furniture (camp equipment) at rate of 10 per cent. Feeling aggrieved by aforesaid order passed by Income-tax Officer, assessee filed appeal which was disposed of by Appellate Assistant Commissioner by order dated September 26, 1970. Before Appellate Assistant Commissioner, it was submitted on behalf of assessee that assessee was not liable to deduct tax on interest paid to foreign banks and same was not income chargeable to tax in taxable territory of India. This contention of assessee was not accepted by Appellate Assistant Commissioner who held that although interest was paid in France for money borrowed there, money was brought into India in kind through transfer of capital assets and, therefore, interest payable to foreign banks was chargeable to income-tax in India and it was responsibility of assessee to deduct income-tax thereon. Appellate Assistant Commissioner, however, held that after assessment order has been issued by Income-tax Officer, assessee had paid sum of Rs. 2,05,264 to State Bank of India, Bombay, on March 30, 1970, towards assessee's liability to deduct tax at source from payments made to non-residents and that in view of aforesaid payment by assessee under Part B of Chapter XVII of Act, Appellate Assistant Commissioner deleted disallowance of Rs. 2,36,007 made by Income-tax Officer. With regard to expenses claimed by assessee, namely, Rs. 3,26,794 and Rs. 19,126, Appellate Assistant Commissioner confirmed order of Income-tax Officer and disallowed said deductions for reason that said expenses did not relate to period of assessment relevant to assessment year under appeal and held that said expenses formed part of capital expenditure. As regards depreciation, Appellate Assistant Commissioner held that assessee could claim depreciation in excess of 12 months in respect of those assets which were used on basis of actual user in view of fact that assessee had been permitted to prepare accounts for period in excess of 12 months. With regard to camp equipment, Appellate Assistant Commissioner held that depreciation should be allowed at rate of 15 per cent. as claimed by assessee instead of 10 per cent. allowed by Income-tax Officer, for reason that there were no permanent houses for staff in desert area where drilling operations were being carried on and equipment and furniture were being used for purpose of boarding and lodging provided to staff. Against aforesaid order of Appellate Assistant Commissioner, two appeals were filed before Tribunal, one by Revenue and other by assessee. In appeal filed by Revenue, objection was taken to order of Appellate Assistant Commissioner in so far as it related to deletion of disallowance of sum of Rs. 2,36,007 paid as interest to foreign banks by assessee and also allowance of depreciation at rate of 15 per cent. on camp equipment. assessee, in its appeal, raised objection to disallowance of expenditure of Rs. 3,26,794 and Rs. 19,126. Both appeals were disposed of by Tribunal by common order dated November 3, 1972. As regards deduction of amount of Rs. 2,36,007 claimed by assessee towards interest paid to foreign banks, Tribunal held that interest income of foreign banks in present case should be taken as income chargeable under Act within meaning of section 40(a)(i). In taking aforesaid view, Tribunal observed that for purpose of determining as to whether income of non-resident is chargeable to tax, what is material is nature of payment that is made to nonresident and if what is paid to non-resident is item which falls in category of income, tax will have to be deducted at source and payer cannot be and is not expected to apply himself to scope of activities of nonresident and arrive at decision whether in particular circumstances of payee, income would be exempt or not in his hands. Tribunal further held that prima facie even interest paid to non-resident in respect of moneys charged from him would be deemed to accrue or arise in India, where money is lent at interest to assessee abroad and brought by latter in India in cash or kind and, therefore, interest income in present case should be taken as interest chargeable under Act within meaning of section 40(a)(i). Tribunal also held that though assessee is foreign company, it has office in India also held that though assessee is foreign company, it has office in India and it is carrying on business activities in India and it can be treated as person in India. Tribunal, however, held that in context of section 40(a)(i), reference to person in India must be taken to mean reference to person in India other than assessee. Tribunal further held that in present case, tax which assessee was liable to was deducted at source under section 195 of Act which in fact has been recovered from it by Department and that for purpose of section 40(a)(i), tax recovered by Department is to be treated as tax paid. Tribunal, therefore, agreed with Appellate Assistant Commissioner that since assessee had paid tax deductible on interest amount paid to foreign banks, assessee was entitled to deduction of same. Tribunal, however, disagreed with Appellate Assistant Commissioner that for allowance of depreciation, camp equipments used for purpose of providing lodging facilities to members of staff would fall under category "furniture" in boarding house. According to Tribunal, assessee was entitled only to normal depreciation at 10 per cent. in respect of such equipment. appeal of Department was, therefore, allowed to this extent. With regard to appeal of assessee, Tribunal dismissed said appeal and upheld orders of Income-tax Officer and Appellate Assistant Commissioner disallowing assessee's claim for expenses of Rs. 3,26,794 and Rs. 19,126 on ground that said expenditure related to period prior to previous year. Feeling aggrieved by order of Tribunal, two reference applications were submitted under section 256(1). Reference Application No. 111 (Jp. ) of 1972-73 was submitted by Additional Commissioner and Reference Application No. 116 (Jp.) of 1972-73 was submitted by assessee. On basis of aforesaid applications, Tribunal has referred following questions for decision of this court: Reference Application No. 111 of 1972-73: " 1. Whether, on facts and in circumstances of case, Tribunal was right in holding that tax was paid by assessee under provisions of Part B of Chapter XVII of Income-tax Act, 1961, and further that assessee was entitled to deduction of interest amounting to Rs. 2,36,007 as provisions of section 40(a) of Income-tax Act, 1961, were not applicable? 2. Whether, on facts and in circumstances of case, Tribunal was justified in holding that interest income in present case should be taken as interest chargeable under Act within meaning of section 40(a) of Income-tax Act, 1961? 3. Whether, on facts and in circumstances of case, and on true interpretation of section 163 of Income-tax Act, 1961, read with section 40(a), was Appellate Tribunal justified in holding that assesseecompany was not agent of non-resident payee?" In Reference Application No. 116 of 1972-73 "1. Whether, on facts and in circumstances of case, Tribunal was justified in disallowing expenditure of Rs. 3,26,794 and Rs. 19,126 incurred before February 17, 1964, from total income for assessment year 1966-67? 2. Whether furniture used for boarding and lodging constitutes furniture used for boarding house on which depreciation was allowable as per Income-tax Rules, 1962, at 15 per cent.?" As regards question No. 2 in Reference Application No. 111 of 1972-73, Tribunal has observed in statement of case that departmental representative had pointed out that said question does not arise out of order of Tribunal and Tribunal agreed to said contention of departmental representative and directed that said question could not be referred. This would show that Tribunal has referred questions Nos. 1 and 3 in respect of Reference Application No. 111 and questions Nos. 1 and 2 in Reference Application No. 116. We have heard Shri R. N. Surolia, learned counsel for Revenue, and Shri S. L. Aneja, learned counsel for assessee. We will first take up questions referred in Reference Application No. 111 of 1972-73 relating to sum of Rs. 2,36.007 claimed by assessee as deduction towards interest paid by it to non-resident banks. As indicated earlier, Appellate Assistant Commissioner and Tribunal have held that aforesaid amount was income of non-resident foreign bank which was chargeable to tax and since assessee had paid tax in respect of aforesaid amount, deduction of said amount should be allowed from income of assessee. Shri Surolia questions correctness of aforesaid findings recorded by Appellate Assistant Commissioner and Tribunal and has submitted that tax which was recovered from assessee should not be treated as tax paid for purposes of section 40(a)(i) and that Appellate Assistant Commissioner and Tribunal have erred in allowing said deduction. Shri Aneja has, on other hand, supported findings recorded by Appellate Assistant Commissioner and Tribunal in this regard and has submitted that amount of tax which has been recovered from assessee must be deemed to be tax paid under Part B of Chapter XVII and since tax had already been paid, said amount of interest could not be added in income of assessee and Appellate Assistant Commissioner and Tribunal have rightly allowed deductions of interest from income of assessee. Shri Aneja has further submitted that Tribunal was in error in holding that amount of interest paid by assessee to non-resident foreign banks was income chargeable in India and has contended that said income could not be said to be income of non-resident foreign banks which had accrued in India under section 9 of Act. Shri Aneja has also submitted that Tribunal was in error in holding that for purpose of section 40(a), assessee could not be treated as agent of nonresident foreigner in respect of payments made to him and that in present case, assessee must be held to be agent of non-resident foreign banks to whom interest was paid and in that view of matter, amount of interest paid by assessee to non-resident foreign banks could not be added in income of assessee under section 40(a). In our opinion, it is not necessary to deal with contention urged by Shri Aneja that interest amount paid by assessee to non-resident foreign banks should not be treated as income of non-resident foreign banks which accrued in India and that said income was not income chargeable to tax for purpose of section 40(a) and other contention of Shri Aneja that assessee being agent of non-resident foreign banks, amount of interest paid by assessee to non-resident foreign banks should not be added in income of assessee, because we find ourselves in agreement with findings recorded by Tribunal that amount that has been recovered from assessee on account of tax on aforesaid interest amount of Rs. 2,36,007 paid by assessee as interest to non-resident foreign banks must be treated as tax paid under Part B of Chapter XVII for purpose of section 40(a). We are unable to agree with Shri Surolia that word "paid" as used in sub-clause (i) of clause (a) of section 40 should be construed to mean only voluntary payment and does not include payment made by assessee in recovery proceedings initiated against him. In our opinion, word "paid" in sub-clause (i) of clause (a) of section 40 is wide enogh to include payment whether made voluntarily or during course of proceedings for recovery initiated against assessee. As observed by Tribunal, object of section 40(a)(i) is to protect interest of Revenue by ensuring that in respect of interest chargeable under Act and payable outside India, tax payable by non-resident is either paid or deducted in cases where non- resident does not have any agent in India from whom it can be recovered. From this point of view, it is immaterial whether Revenue has received payment of tax due either by voluntary act on part of assessee or by initiation of recovery proceedings against assessee. It may also be observed that under Act involuntary payment of tax, whether by way of deduction at source or by way of recovery under provisions of Act, is regarded as tax paid. In this connection, we may refer to section 199 of Act which provides that any deduction made in accordance with provisions of sections 192 to 194, section 194A, section 194B, section 194BB, section 194C, section 194D and section 195 of Act and paid to Central Government should be treated as payment of tax on behalf of person from whose income deduction was made. Similarly, in section 219 of Act, it is provided that any sum, other than penalty or interest, paid by or recovered from any assessee as advance tax in pursuance of Part C of Chapter XVII shall be treated as payment of tax. In this context, reference may also be made to provisions of section 237 of Act which provides that if any person satisfies Income-tax Officer that amount of tax paid by him or on his behalf or treated as paid by him or on his behalf for any assessment year exceeds amount with which he is properly chargeable under this Act for that year, he shall be entitled to refund of excess. It could not be intention of Parliament to confine powers of refund of excess only in cases where tax has been voluntarily paid and to deny such power where tax has been recovered from assessee. In our opinion, aforesaid provision in section 237 covers all cases where tax has either been paid voluntarily by assessee in pursuance of demand made by income-tax authorities or amount of tax has been recovered from him by process of recovery prescribed under law or has been deducted under provisions of Act and in all such cases, assessee would be entitled to refund of excess amount. This would show that for purpose of refund under section 237, tax recovered from assessee is regarded as tax treated as paid by him. We are, therefore, of opinion that word "paid" as used in sub-clause (i) of clause (a) of section 40 covers not only voluntary payments but also payments made otherwise, i.e., amount recovered from assessee under provisions of Act. In present case, we find from order of Appellate Assistant Commissioner that sum of Rs. 2,05,265 was paid by State Bank of India, Bombay, to Department on March 30, 1970, out of bank guarantees furnished by assessee towards assessee's liability to deduct tax at source on payment to non-residents. From order of Appellate Assistant Commissioner, we further find that in their letter dated September 21, 1970, addressed to Appellate Assistant Commissioner, assessee had confirmed that they do not propose to object to act of recovery already made from their guarantee, if item of disallowance of interest paid to non- residents is deleted from assessment. In these circumstances, we are of residents is deleted from assessment. In these circumstances, we are of opinion that Appellate Assistant Commissioner and Tribunal were right in deducting sum of Rs. 2,36,007 which was added to income by Income-tax Officer and since assessee in their letter addressed to Appellate Assistant Commissioner has expressed its desire not to object to act of recovery made from bank guarantee, we do not consider it necessary to go into question as to whether amount of interest that was paid by assessee to non-resident foreign banks was chargeable to tax or not and also question as to whether assessee should be regarded as agent of non-resident foreign banks under section 163 of Act. We may now come to question No. 1 referred in Reference Application No. 116 of 1972-73 relating to disallowance of expenses to tune of Rs. 3,26,794 and Rs. 19,126. As pointed out earlier, aforesaid expenses have been disallowed by Tribunal on ground that same related to period prior to previous year relevant to assessment year in question. Shri Aneja has submitted that aforesaid expenses were incurred by assessee in connection with contract entered into by assessee with Oil and Natural Gas Commission and that same were incurred during period from September 13, 1963, to February 2, 1964, i.e., after communication of approval of contract but prior to execution of formal contract. According to Shri Aneja, these expenses were in nature of Revenue expenses and even though they related to period prior to previous year relevant to assessment year in question, said expenses could be claimed by assessee. In support of aforesaid submission, Shri Aneja has placed reliance on Gustad Dinshaw Irani v. CIT [1957] 31 ITR 92 (Bom), Gappumal Kanhiyalal v. CIT [1961] 42 ITR 446 (All) and Security Printers of India (P.) Ltd. v. CIT [1970] 78 ITR 766 (All). Shri Surolia, on other hand, has submitted that expenses in question have been rightly disallowed as same were incurred during period earlier than previous year relevant to assessment year in question. In this regard, Shri Surolia has placed reliance on decision of Privy Council in CIT v. Basant Rai Takhat Singh [1933] 1 ITR 197. In Basant Rai Takhat Singh's case, Judicial Committee of Privy Council has laid down that allowance for any expenditure incurred must be allowance for expenditure incurred in year in respect of income, profits and gains forming basis of assessment arose. principle laid down in this decision is, however, subject to exception that in case of single venture, expenditure incurred by assessee in respect of that venture during prior years must be allowed while assessing profits of that venture. In Gustad Dinshaw Irani's case [1957] 31 ITR 92 (Bom), assessee was partner in several firms doing restaurant business in Bombay and during course of assessment for assessment year 1951-52, assessee had claimed deduction in respect of ground rent and taxes paid in relation to plot of land which was obtained by assessee in 1946. said expenses were disallowed by Tribunal on ground that they related to years prior to 1950-51. Bombay High Court disagreed with Tribunal and held that said expenses should have been deducted. Bombay High Court has observed as under (p. 98): "With regard to second question, rather curious claim is put forward by Taxing Department that profits of this venture should be assessed without giving any relief to assessee with regard to expenses incurred in connection with this transaction prior to year 1950-51. sum of Rs. 1,770 that was paid for brokerage was allowed inasmuch as that amount was paid in year of account, but annual ground rent which assessee paid in years previous to year of account was disallowed on ground that this expenditure was not incurred in year of account and that contention was accepted by Tribunal. In accepting this contention, Tribunal with respect, has overlooked nature of single venture in nature of trade. In case of single venture, profits become assessable only when that venture comes to end and in this case venture came to end in year of account. It was only then that profits could be ascertained and profits subjected to tax. Therefore, question that arose in year of account was: What were real profits from commercial point of view which assessee earned? It is impossible to contend that real profits were amount actually realised by assessee by assignment of his right under agreement with municipality without taking into consideration expenses that he had incurred prior to this assignment. If one were to ignore expenses, then one would not arrive at real profits which assessee earned. Mr. Joshi on behalf of department says that under Income-tax Act only those expenses can be deducted under section 10 which were incurred in previous year and if any expense was not incurred in previous year but was incurred in previous years, then that expenditure is not legitimate deduction under section 10. That, in our opinion, is wrong approach to question. What we have to consider is what are commercial profits, real profits which have been earned in year of account and which are liable to tax, and if those real profits can only be arrived at after taking into consideration expenditure incurred in prior years, then even though expenditure may not strictly fall within ambit of section 10, for purpose of assessing real profits, credit must be given to assessee in respect of expenditure incurred in prior years." In Gappumal Kanhiyalal's case [1961] 42 ITR 446 (All), assessee was carrying on money-lending business and it had incurred certain expenses in litigation for recovery of sum of money advanced by it on mortgage between years 1939 and 1943 in accounting year 1944-45. Division Bench of Allahabad High Court has held that assessee was entitled to deduct expenses in account year though they were incurred in earlier years, because for purposes of calculation of income-tax, they could be considered to be expenses incurred in accounting year on basis of regularly employed method of assessee's accounting on basis of which income, profits and gains were required to be computed under section 13 of Indian Income-tax Act, 1922 in that case, High Court has taken note of decision of Privy Council in Basant Rai Takhat Singh's case [1933] I ITR 197 (PC) referred to by Shri Surolia. In Security Printers of India (P.) Ltd.'s case [1970] 78 ITR 766 (All), assessee was limited company. It was incorporated on April 6, 1957. For assessment year 1958-59, assessee claimed deduction of certain expenses. Some of these expenses related to period prior to incorporation of assessee-company. said expenses were in nature of travelling expenses assessee-company. said expenses were in nature of travelling expenses of directors to explore possibilities of business, for procuring import licence, to collect details or secure orders and to study techniques of security printing, said expenses were disallowed by Income tax Officer on ground that these were pre-incorporation expenses of company and were capital in nature. Appellate Assistant. Commissioner held that expenses were all of revenue nature and as they had been incurred by promoters of assessee-company in connection with business which was subsequently taken over by company in its incorporation and they were allowable as business expenses. Tribunal, however, disallowed part of expenses on ground that they were capital expenses. High Court disagreed with Tribunal that expenses were capital in nature and held that expenditure incurred by businessman or his agent on foreign tours to acquaint himself with new and modern techniques is revenue in character. High Court observed that main consideration which has got to weigh with court is whether expenditure was part of process of profit-making, or it was designed to bring into existence new asset. In present case, details of expenses have been mentioned in annexure to Reference Application No. 116 of 1972-73 which was submitted by assessee before Tribunal. This would show that expenditure of Rs. 3,26,783.76 included, (i) travelling expenses for trips from Paris to India and back and for trips in France in interests of securing contracts by negotiations and for collecting information relevant thereto, (ii) salaries and allowances (social security), etc., for personnel employed on work relating to contract including collection of materials, setting up of "Testing of Machinery by IFP Engineers", (iii) expenses charged by banks for ways and means arrangements connected with procurement of materials for contract, (iv) expenses on transportation and collection of materials/ machineries required for contract, (v) expenses incurred for setting up of rig and its being tested by IFP Engineers as enjoined in terms of contract, and (vi) expenses incidental to contract including those for bringing materials to required specifications, insurance charges, maintenance of personnel, rent of godowns, entertainment, handling of materials, P & T charges, consumables and spares and expenses in India during trips. expenses amounting to Rs. 19,126 claimed by assessee relate to expenditure incurred on imported spare parts consumed prior to shipment of equipment to India. It may be mentioned that Income-tax Officer in his order of assessment has observed: "It is clear that all these preliminary expenses were incurred in connection with contract". Appellate Assistant Commissioner has agreed with aforesaid finding of Income-tax Officer. only ground on basis of which said expenses were disallowed by Income-tax Officer as well as Appellate Assistant Commissioner was that same would have to be capitalised and added to cost of assets for depreciation purposes. In this regard, it may be stated that although previous year relevant to assessment year 1966-67 covered period from September 10, 1964 to December 31, 1965, Income-tax Officer has allowed deduction of expenditure for period subsequent to February l6, 1964, i.e., from date of execution of contract. In other words, income-tax authorities have allowed deduction of expenditure for period beyond previous year relevant to assessment year in question. If reason given by Tribunal that said expenditure related to period prior to previous year to I he assessment year in question is to be applied, then expenditure for period from February 16, 1964, till September 10, 1964, should also have been disallowed. We, are, however, of opinion that Tribunal was riot right in disallowing aforesaid expenditure that was claimed by assessee on ground that it related to period prior to previous year relevant to assessment year in question. In present case, only income that was derived by assessee in India was from contract which was entered into by it with Oil and Natural Gas Commission. aforesaid contract was in nature of single transaction and expenditure that was claimed by assessee has been found to be incurred in connection with that contract. In our view, Income-tax authorities have erred in holding that said expenditure should be treated as expenditure of capital nature. said expenditure was part of process of profit-making by assessee in contract which was entered into by it with ONGC and without incurring said expenditure, assessee would not have been able to obtain said contract and to perform it. aforesaid expenditure of Rs. 3,26,794 and Rs. 19,126 claimed by assessee should have been allowed and it has been wrongly disallowed by Income-tax authorities. We may now come to question No. 2 of Reference Application No. 116 of 1972-73 relating to depreciation claimed by assessee on furniture which was part of camp equipment. Appellate Assistant Commissioner allowed depreciation at rate of 15 per cent. on view that camp equipment consisted of temporary wooden frames, tents and wooden furniture used for purposes of providing lodging facilities to members of its staff and staff of ONGC in accordance with agreement as there were no permanent houses for stay of staff in desert area where drilling operations were being carried on. According to Appellate Assistant Commissioner, camp equipment and furniture were being used for purpose of boarding house provided to staff and, therefore, depreciation at rate of 15 per cent. should be allowed. Tribunal has disagreed with aforesaid finding of Appellate Assistant Commissioner and has held that camp equipment used for purpose of providing lodging facilities to members of staff do not fall under category of "furniture in boarding house". Shri Aneja has assailed aforesaid finding recorded by Tribunal and has submitted that on facts and in circumstances of case, Appellate Assistant Commissioner was justified in holding that furniture and equipment that was being used to provide lodging facilities to staff as well as to staff of ONGC should be treated as furniture in boarding house for purpose of depreciation and that it is covered by item 11(2) of Part I of Appendix I to Income-tax Rules, 1962 ("the Rules"). Item 11(2) prescribes rate at which depreciation is admissible for furniture and fittings. It prescribes general rate of 10 per cent. under clause (1) and clause (2) depreciation at rate of 15 per cent. is prescribed in respect of "furniture and fittings used in hotels, restaurants, boarding houses, schools, colleges and other educational institutions, libraries, welfare centres, meeting halls, cinema houses, theatres and circuses arid for furniture and fittings let out on hire for use on occasion of marriages and similar functions." reason why higher rate of 15 occasion of marriages and similar functions." reason why higher rate of 15 per cent. has been prescribed for furniture and fittings referred to in clause (2) appears to be that said furniture and fittings are to be used in places where it is likely to be put, to greater wear and tear. In present case, as pointed out by Appellate Assistant Commissioner, assessee was required to conduct drilling operations in desert area and there were no permanent houses for stay of staff of assessee and ONGC near drilling site. In order to provide accommodation to members of staff and staff of ONGC, assessee had to make arrangements for lodging facilities at site and camp equipment and furniture that were provided by assessee at site and was being used for purpose of providing lodging to staff in form of temporary boarding house and it was thus covered by clause (2) of Item 11 of Appendix 1. Appellate Assistant Commissioner was, therefore, justified in holding that depreciation should be allowed on camp equipment and furniture at rate of 15 per cent. and Tribunal was not right in reducing rate of depreciation from 15 per cent. to 10 per cent. In result, we answer questions referred to us as under Reference Application No. 111 of 1972-73. Question No. 1.- Affirmative. Tribunal was right in holding that tax was paid by assessee under provisions of Part B of Chapter XVII and further that assessee was entitled to deduction of interest amounting to Rs. 2,36,007. Questions Nos. 2 and 3.- Need not be answered in view of answer given to question No. 1. Reference Application No. 116 of 1972-73: Question No. 1.- Negative. On facts and in circumstances of case, Tribunal was not justified in disallowing expenditure of Rs. 2,26,794 and Rs. 19,126 incurred before February 7, 1984, from total income for assessment year 1966-67. Question No. 2: Affirmative. furniture used for boarding and lodging constitutes furniture used for boarding house in which depreciation was allowable as per Rules at rate of 15 per cent. On facts and in circumstances of case, parties are ordered to bear their own costs. *** ADDITIONAL COMMISSIONER OF INCOME -TAX v. FARASOL LTD.