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JUDGMENT L. Narasimha Reddy, J. - This reference is at the instance of the Revenue. The respondent is an assessee and she undertakes the activity of construction of buildings giving them on lease and other allied activities. 2. Certain extent of land owned by the Young Men's Christian Association at Secunderabad was taken on lease by the respondent. In terms of the agreement between the parties, construction was made and buildings were given on lease. The expenditure incurred for construction as well as the income derived from the buildings constituted the subject matter of assessment for various years under the Income-tax Act (for short "the Act"). While for some years, the income derived from the buildings so constructed was treated as the one from business, for others the assessing authority treated it as the one from house property. Similarly, the claim of the respondent that the expenditure incurred for construction of the building must be treated as the revenue expenditure was not accepted and it was treated as capital expenditure. 3. The orders passed by the assessing authority were appealed against and ultimately, the matter landed before the Income-tax Appellate Tribunal, Hyderabad Bench "B" (for short "the Tribunal") as I.T.A. Nos. 602 and 606 of 1993. The Tribunal agreed with the contention of the respondent herein and allowed the appeals. 4. The Department filed applications under section 256 of the Income-tax Act, 1961 (for short "the Act") before the Tribunal with a request to refer certain questions covering the subject matter ; to this court. After hearing both the parties, the Tribunal passed an order, dated July 17, 1995, referring the following questions to this court. R.A. Nos. 545 to 549/Hyd/1994 "1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law in holding that the entire expenditure incurred by the assessee on the construction of the building on the leasehold land is a revenue expenditure ? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law in holding that the provisions of section 32(1A) of the Act will not…

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