Madhya Pradesh H.C : 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 under s. 26 of the Beedi and Cigar Workers (Conditions of Employment) Act, 1966, and that the said amount was deductible in computing the income of the assessee ?

High Court Of Madhya Pradesh

CIT vs. K. Aminuddin & Sons

Section 256(2)

Asst. Year 1976-77

G.G. Sohani, Actg. C.J. & K.M. Agarwal, J.

Misc. Civil Case No. 290 of 1984

7th December, 1988

Counsel Appeared

Rawat, for the Revenue : None appeared, for the Assessee

G. SOHANI, ACTG. C. J. :

This is an application under s. 256(2) of the IT Act, 1961 (hereinafter referred to as the “Act”).

2. The material facts giving rise to this reference briefly are as follows:

The assessee carries on the business of manufacture and sale of beedis. While framing the assessment for the asst. yr. 197677, the ITO 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 ss. 21, 26 and 27 of the Beedi and Cigar Workers (Conditions of Employment) Act, 1966. The ITO 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.

3. 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 under s. 26 of the Beedi and Cigar Workers (Conditions of Employment) Act, 1966, and that the said amount was deductible in computing the income of the assessee ?”

4. 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.

[Citation : 177 ITR 417]

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