- (1.) Leave granted.
(2.) By consent of learned advocates of both the sides the appeal is finally heard and is being disposed of by this judgment. The appellant- commissioner of Income Tax, has brought in challenge the judgment and order dated 13/5/1987 passed by the High court of orissa at Cuttack answering the referred question under Section 256 (1 of the Income Tax Act, 1961 against the Revenue and in favour of the assessee. It is the contention of the Income Tax authorities that the question should be answered against the assessee. A few relevant facts centreing around the question in controversy deserve to be noted at this stage.
(3.) The relevant assessment year is 1971-72. The respondent-assessee is a limited company which manufactures and sells steel tubes in the State of orissa, During the previous year relevant to Assessment Year 1962-63, the assessee was liable to pay sales tax under the central Sales Tax Act. The Sales tax Officer completed the assessment in respect of Assessment Year 1962-63 on 31/3/1966 and demanded an additional amount of Rs. 11,02,698. 00. The assessee unsuccessfully carried the matter in appeal and then filed second appeal before the Sales Tax tribunal. The tribunal by its order dated 28/5/1970 reduced the additional demand of sales tax to Rs. 2,22,161. 00. On the basis of the aforesaid order of the tribunal, the respondent-assessee claimed deduction of the said amount as business expenditure in respect of the assessment for the previous year 1970-71 since according to the assessee the sales tax liability was of the Assessment Year 1971-72.;