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JUDGMENT Raghavan, J.-This reference came before a Division Bench of this court (M. S. Menon C.J. and Madhavan Nair J.) in August, 1963 [1964] 51 ITR 24 : and this court answered the question referred "Whether, on the facts and in the circumstances of the case, the payment of Rs. 42,480 by the assessee to the Travancore Government under the agreements dated June 18, 1937, and January 28, 1947, was allowable under section 10 of the Income-tax Act ?" in the negative against the assessee-company. The company took up the matter before the Supreme Court; and the Supreme Court allowed the appeal. This court, relying mainly on the preamble to the agreement between the company and the Government of Travancore which contained an expression that the payment was "also in consideration "held that the expenditure was not of a revenue nature, but of a capital nature, in other words, towards the unpaid portion of the purchase price. In view of that, this court did not consider the other contention raised by the revenue that the agreement showed only a payment by way of division of earned profits of a common venture between the company and the Government. The Supreme Court held that the payment was not in the nature of a capital payment, but was in the nature of a revenue payment. Still, the Supreme Court observed that since the other questions, (1) whether the company was right in the contention that the payment was tantamount to a diversion of profits by paramount title, (2) whether the contention of the revenue that the transaction should be treated as a joint venture with an agreement to share profits was right, and (3) whether section 10(2)(xv) of the Income-tax Act of 1922 applied to the payment, were not decided by this court, the Supreme Court could not give an answer to the question referred. For considering those questions, and answering the question referred, the Supreme Court has remanded the case. The judgment of the Supreme Court is reported as Travancore Sugars and Chemicals Ltd. v. Commissioner of Income-tax [1966] 62 ITR 566 (SC). The case comes up before us for fresh consideration on the lines pointed out by the Supreme Court. Though it appears that the…

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