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JUDGMENT Banerjee, J.-This is a reference under section 66(1) of the Indian Income-tax Act, 1922. The assessment year involved is the year 1955-56, the corresponding previous year being the calendar year ended on December 31, 1954. The assessee is a firm engaged in coal mining. During the assessment year in question, the assessee operated two collieries named Modern Satgram Colliery and Ratibaty Colliery. In respect of pits Nos. 1 and 2 of the latter colliery, the Cess Deputy Collector of Burdwan levied road and education cesses amounting in all to Rs. 11,906, for the year 1954, and the assessee paid the sum. This sum was claimed by the assessee as a business expenditure, allowable under section 10(2)(xv) of the Indian Income-tax Act. The Income-tax Officer disallowed this expenditure with the observation, "not allowable as being based on profit". Obviously, in disallowing the claim, the Income-tax Officer had in mind the provisions of section 10(4) of the Indian Income-tax Act, which reads as follows: "Nothing in clause (ix) or clause (xv) of sub-section (2) shall be deemed to authorise the allowance of any sum paid on account of any cess, rate or tax levied on the profits or gains of any business, profession or vocation or assessed at a proportion of or otherwise on the basis of any such profits or gains;" The Appellate Assistant Commissioner, before whom the assessee appealed, dismissed the appeal with the observation : "The Income-tax Officer has disallowed Rs. 11,906 claimed on account of road and education cesses. The former was dependent on the profits earned while the latter had nothing to do with the appellant's business activities. The disallowance on these accounts has therefore been correctly made and as such it will not be interfered with" The assessee preferred a second appeal before the Appellate Tribunal. It was contended before the Tribunal that the levy of road and education cesses had been made merely on the estimated net profits and since such estimated profits had no relationship with actual profits earned during the relevant period, it must be held that the provisions of section 10(4) were not applicable. The Tribunal upheld the contention…

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