Hegde, J. - (1.) The Commissioner of Income-tax, Madras is appealing against the decision of the Madras High Court in a Reference under Section 66 (2) of the Indian Income Tax Act, 1922 (to be hereinafter referred to as the Act) after obtaining certificate of fitness from the High Court.
(2.) The question before the authorities under the Act was whether the payment of Rs. 2,50,000/- made by the respondent-assessee which will hereinafter be referred to as the "company" for the termination of managing agency is an allowable deduction in computing the total income of the company for 1956-57. The Income-tax Officer as well as the Appellate Assistant Commissioner rejected the claim of the Company that it was a Revenue expenditure but the Tribunal in appeal upheld the contention of the Company. Aggrieved by the decision of the Tribunal, the Commissioner demanded a case to be stated for obtaining the opinion of the High Court on the question: " Whether on the facts and in the circumstances of the case the payment of Rs. 2,50,000/- made for the termination of Managing Agency is an allowable deduction in computing the total income of the assessee company for 1956-57."
(3.) The Tribunal refused to state the case taking the view that its findings are findings of fact. Thereafter the Commissioner moved the High Court under S. 66 (2) and at the instance of the High Court, the Tribunal stated the case and submitted the aforementioned question of law to the High Court. But the High Court answered that question in the affirmative and in favour of the Company.;