( 1 ) UNDER Section 256 (2) of the Income-tax Act, 1961, the Tribunal has submitted the following question ; "whether, on the facts and in the circumstances of the case, was the expenditure incurred by the assessee on the foreign tour of two of its directors an allowable deduction either in whole or in part ?" ( 2 ) THE assessee is a limited company running a five star hotel known as Hotel Clark Shiraz at agra. For the assessment year 1972-73, the assessee claimed deduction of Rs. 40,295 on account of foreign travel of its two directors and other incidental expenses. The Income-tax Officer disallowed 2/3rds of the said amount while allowing deduction of l/3rd thereof. This was for the reason that the agreement between the assessee and the Ramada Inns provide that the technical collaboration related to the operation of the existing hotel and construction of future hotels. The income-tax Officer found that the petitioner was setting up two new hotels at Lucknow and some other place. ( 3 ) ON appeal, the Appellate Assistant Commissioner agreed with the Income-tax Officer and dismissed the appeal. The further appeal to the Tribunal was also of no avail. Thereupon, the present reference was obtained by the assessee. ( 4 ) IT is stated in the statement of case that the agreement between the assessee and Ramada Inns recited that the technical assistance was being obtained from Ramada Inns for "operation and construction of its existing and future hotels", The Tribunal agreed with the Income-tax Officer in that, in so far as the agreement related to the existing hotel, the expenditure was revenue in nature but, in so far as it related to the hotels under construction, the expenditure would be of a capital nature. ( 5 ) HAVING regard to the circumstances of the case, viz. , that the assessee was running a hotel at agra and was constructing two other hotels at different places, the allocation done by the income-tax Officer was affirmed by the Tribunal. ( 6 ) THERE can be little doubt about the fact that, if the expenditure related only to the existing business, it would have been revenue in nature but it is not so in this case ; the agreement was a composite one. It related both (i) to the existing business, and (ii) to the proposed hotels under construction. ( 6 ) THERE can be little doubt about the fact that, if the expenditure related only to the existing business, it would have been revenue in nature but it is not so in this case ; the agreement was a composite one. It related both (i) to the existing business, and (ii) to the proposed hotels under construction. In the circumstances, the authorities could not be said to have been unjustified in allocating the expenditure in the manner they did. The entire expenditure on the foreign tour could not have been allowed as revenue deduction. ( 7 ) FOR the above reasons, the question referred is answered in the negative, i. e. , in favour of the revenue and against the assessee in the above terms. .