Law:

Section:

Section 37(1), read with section 256 of the Income-tax Act 1961 - Business expenditure - Allowability of - Assessment year 1976-77 - Assessee, who carried on business of manufacture and sale of bidis claimed deduction of certain amount for holiday wages and leave with wages under sections 21, 26 and 27 of the Bidi and Cigar Workers (Conditions of Employment) Act, 1966 - ITO disallowed assessee's claim on ground that no actual payment was made in that behalf by assessee - On appeal Tribunal held that claim made by assessee was an ascertained liability, and thus it was to be allowed - Whether a referable question of law did arise from order passed by Tribunal - Held, yes FACTS The assessee carried on the business of manufacture and sale of bidis. While framing the assessment, the ITO disallowed the claim made by the assessee for deduction of amount for holiday wages and leave with wages under the provisions of sections 21, 26 and 27 of the Bidi and Cigar Workers (Condition of Employment) Act, 1966. The ITO held that as no actual payment was made in that behalf by the assessee, the claim 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 should be considered as an ascertained liability for the purpose of income-tax computation. The reference application filed by the revenue was also rejected. On an application under section 256(2) : HELD A question of law did arise out of the order passed by the Tribunal and the Tribunal was directed to the state the case and to refer the question of law to the High Court for its opinion B.K. Rawat for the Applicant. B.L. Nema for the Respondent. JUDGMENT G.G. Sohani, Actg., C.J.-This is an application under section 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…

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