Commissioner of Income Tax vs Alimbeg Salimbhai

G.G. Sohani, Actg. C.J.

This is an application u/s 256(2) of the Income Tax Act, 1961 (hereinafter referred to as the "Act").

The material facts giving rise to this reference briefly are as. follows : The assessee carries on the business of manufacture and sale of bidis. While framing the assessment for the assessment year 1976-77, the Income Tax Officer disallowed the claim made by the assessee for deduction of a sum of Rs. 2,03,722 for holiday wages and leave with wages under the provisions of Sections 21, 26 and 27 of the Bidi and Cigar Workers (Conditions of Employment) Act, 1966. The Income Tax Officer held that as no actual payment was made in that behalf by the assessee, the claim of the assessee in that behalf was liable to be disallowed. The appeal preferred by the assessee was dismissed. On further appeal before the Tribunal, the Tribunal allowed the appeal and directed that the liability of Rs. 2,03,722 should be considered as an ascertained liability for the purpose of Income Tax computation. Aggrieved by the order passed by the Tribunal, the Revenue submitted an application for making a reference, but that application was rejected. Hence, the Revenue has.filed this application.

Having heard learned counsel for the parties, we have come to the conclusion that the following question of law does arise out of the order passed by the Tribunal :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the liability of the assessee for the amount of Rs. 2,03,722 was an ascertained liability u/s 26 of the Bidi and Cigar Workers (Conditions of Employment) Act, 1966, and that the said amount was deductible in computing the income of the assessee?"

The application is, therefore, allowed. The Tribunal is directed to state the case and to refer the aforesaid question of law to this court for its opinion. In the circumstances of the case, parties shall bear their own costs of this reference.