Ajit K. Sengupta, J. - (1.) In this reference, the judgment was delivered on November 9, 1990, giving certain directions to the Tribunal to re-examine the case in the light of the facts and circumstances of the case as highlighted by learned counsel for the Revenue. It was found later that the submission made on the basis whereof the direction was given was not factually correct. Accordingly, the judgment dated November 9, 1990, is recalled. The matter is further heard.
(2.) In this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1978-79, the following question of law has been referred to this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the additional corporation tax of Rs. 6,22,718 was allowable as deductions in this year ?"
(3.) Shortly stated, the facts are that the assessee claimed a sum of Rs. 10,82,484 being expenditure relating to earlier years for which liability was stated to have arisen during the accounting period. This amount included short provision of Rs. 8,37,106 for corporation tax. It was explained that the corporation proposed enhancement of valuation with effect from the third quarter of 1969-70 and the assessee's objection thereto was heard in June, 1976. But the corporation intimated to the assessee its decision in July, 1977, relevant to the assessment year under consideration. Accordingly, it was claimed that the extra liability arose during the year and since the assessee had made short provision for the corporation tax in the earlier years, the difference should be allowed in the assessment year.;