SUHAS CHANDRA SEN, J. ( 1 ) THE Tribunal has referred the following questions of law to this court under Section 256 (1) of the Income-tax Act, 1961 :"1. Whether, on the facts and in the circumstances of the case, the sums of Rs. 46,208 (RA No. 550), Rs. 2,36,794 (RA No. 552), Rs. 2,95,680 (RA No. 554), Rs. 3,61,890 (RA No. 556), Rs. 3,13,722 (RA No. 557), Rs. 6,50,193 (RA No. 559) and Rs. 5,61,571 (RA No. 562) paid by the assessee-company for the purchase of loom hours during the respective accounting periods relevant to the assessment years 1958-59, 1959-60, 1960-61, 1961-62, 1962-63, 1963-64 and 1964-65 constituted capital expenditure in its hands and were not deductible accordingly under Section 37 (1) of the Income-tax Act, 1961, in the computation of its total income for the aforesaid years. ( 2 ) WHETHER, on the facts and in the circumstances of the case, the company's sale of loom hours in each of the accounting periods relevant to the assessment years 1963-64 and 1964-65 resulted in respective capital gains of Rs. 77,572 (assessment year 1963-64) and Rs. 2,58,838 (assessment year 1964-65) assessable under Section 45 of the Income-tax Act, 1961 ? ( 3 ) IF the answer to the common question No. 2 above is in the affirmative, whether the said capital gain in each of the said years was chargeable as short-term capital gain and not as long-term capital gain ? ( 4 ) WHETHER, on the facts and in the circumstances of the case, the expenditure of Rs. 2,314 incurred by the assessee-company by way of payment of brokerage in respect of the aforesaid sale of loom hours was not admissible as a revenue expenditure in the accounting period relevant to the assessment year 1963-64 ? ( 5 ) WHETHER, on the facts and in the circumstances of the case, the expenditure of Rs. 4,246 incurred by the assessee-company by way of payment of brokerage in respect of the sale of loom hours amounting to Rs. 2,58,238 was not admissible as a revenue expenditure in the accounting period relevant to the assessment year 1964-65 inasmuch as the said sale represented sale of a capital asset to the purchaser thereof ?" 2. The assessment years involved are 1958-59 to 1964-65. 3. 2,58,238 was not admissible as a revenue expenditure in the accounting period relevant to the assessment year 1964-65 inasmuch as the said sale represented sale of a capital asset to the purchaser thereof ?" 2. The assessment years involved are 1958-59 to 1964-65. 3. The controversy relating to the character of the loom hours has been settled by the Supreme Court in the case of Empire Jute Co. Ltd. v. C1t [1980] 124 ITR 1, where it was held that the allotment of loom hours under the working time agreement to different mills did not constitute a right but merely a contractual restriction on the right of every mill to work its looms to their full capacity, and purchase of loom hours by a mill had the effect of relaxing the restriction. The expenditure incurred by the appellant for purchase of loom hours was for the purpose of operating its looms and was revenue in nature and was allowable as a deduction under Section 10 (2) (xv) of the Indian Income-tax Act, 1922. By the purchase of loom hours no new asset was created. There was no addition to or expansion of the profit-making apparatus of the appellant. The acquisition of additional loom hours did not add to the fixed capital of the appellant. 4. In view of the principle laid down in that judgment, question No. 1 is answered in the negative and in favour of the assessee. 5. The second question is answered in the following manner : the money received by the assessee by sale of loom hours will be a revenue receipt and not capital gain. The receipt will be taxable as income from business. This question is answered in favour of the Department. ( 6 ) IN view of the answer to questions Nos. 1 and 2, question No. 3 does not arise and need not be answered. ( 7 ) QUESTIONS Nos. 4 and 5 must be answered in the negative and in favour of the assessee. ( 8 ) IT has been stated on behalf of the assessee that Kinison Jute Mills Co. Ltd. has now been taken over by National Jute Mfrs. Corpn. Ltd.