Bharucha, J. - (1.) We are concerned in these appeals, from a decision of a Division Bench of the High Court of Kerala, with the Assessment Year 1972-73, the previous year of which ended for the assessee on 30th September, 1971. The question that was referred to the High Court and which it answered in the negative and against the assessee reads thus:"Whether on the facts and in the circumstances of the case, the assessee is entitled to claim deduction of Rs. 4,18,107/- under Section 37 of the Income-tax Act -
(2.) The assessee, an individual, carried on the business of processing cashew nuts in ten units. Four of these units were situated in Kerala. Of these four units, two were owned by the assessee and two were taken on lease. In October, 1969, the assessee faced labour problems in Kerala, consequent upon which he ordered a lock-out of the four units there. On 9th March, 1970, the assessee leased out the two units which he owned in Kerala to a private limited company whose only two shareholders were the assessee and his wife. The agreement in this behalf provided that the workmen employed in the two units would have continuity of service. At about the same time the lessee surrendered the two units in Kerala which he had taken on lease. On 21st November, 1970 the assessee entered into a settlement with the trade unions representing the workmen of the units in Kerala and agreed to pay them for the periods of their service up to the date of the lock-out five days wages for each year of service. An aggregate payment of Rs. 4,18,107/- was made in this behalf.
(3.) The payment having been made in the course of the previous year relevant to the Assessment Year 1972-73, the assessee made a claim for the deduction of the said sum of Rs. 4,18,107/- under Section 37 of the Income-tax Act, 1961. The Income-tax Officer disallowed the claim. In appeal, the claim was allowed. The Tribunal upheld the decision in appeal. From out of the order of the Tribunal, the question afore-stated was referred to the High Court. The High Court, by the judgment and order under appeal, answered the question against the assessee. The assessee is here by special leave.;