R.K.Agrawal J. - (1.) The Income-tax Appellate Tribunal, New Delhi, has referred the following two questions of law under Section 256(2) of the Income-tax Act, 1961, hereinafter referred to as the Act, for opinion to this court. "1. Whether on the facts and in the circumstances of the case, the Tribunal was in law justified in holding that the assessee's claim representing sales tax liability relating to earlier years were an allowable deduction in the years under consideration, viz., assessment years 1976-77, 1977-78, 1978-79 and 1979-80 ?
(2.) Whether the Tribunal was correct in allowing the assessee's claim for a sum of Rs. 82,077 as liability raised against him by an order of the Regional Director, E.S.I., by his order dated October 29, 1975, for the years other than the assessment year 1976-77 ?"
(3.) The present reference relates to the assessment years 1977-78 to 19793. Briefly stated the facts giving rise to the present reference are as follows : The respondent-assessee is a private limited company enjoying income from manufacture of glass articles. During the course of assessment for the years 1976-77 to 1979-80, the Income-tax Officer declined the assessee's claim of additional sales tax liability on the ground that it was following the mercantile system of accounting and the amount related to the earlier assessment years and not for the assessment year in which the deduction is being claimed. The details of the said amount are given below : Rs. 1976-77 7,9881977-78 7,4701978-79 24,1381979-80 19,790;