Y.R.Meena, J. - (1.) On an application under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following questions set out at pages 1 and 2 of the paper book : "1. Whether, the Tribunal was right in holding that the additional liability of Rs. 1,17,20,456 for eucalyptus royalty was an unascertained contingent liability and hence not an allowable deduction in computing the total income for the assessment year 1980-81 ?"
(2.) Whether, the finding of the Tribunal that the said additional liability for eucalyptus royalty Rs. 1,17,20,456 was a contingent liability or that the assessee had chosen to adopt cash system of accounting in respect thereof are based on any material and/or are perverse ?
(3.) Whether, the Tribunal was right in holding that the said additional liability for eucalyptus royalty Rs. 1,17,20,456 was neither a statutory liability nor a liability in present but a contractual or de futuro liability ?" 2. The assessee is a limited company and engaged in the manufacture and sale of paper. The assessment year involved is 1980-81 for which the relevant year ended on March 31, 1980. The main raw materials used by the applicant/assessee for manufacture of paper are eucalyptus wood and pine wood. The said raw materials are obtained from the forests of the Government of Uttar Pradesh. The terms and conditions on which such raw materials are supplied by the Government of Uttar Pradesh are that the applicant would pay the royalty as would be determined by the Government. Initially, royalty on eucalyptus wood supplied by the Government of Uttar Pradesh was fixed at Rs. 90 per volumetric ton (hereinafter referred as V. M. T.). In terms of the Government order, the said royalty was revisable every two years. During the relevant previous year the applicant/assessee received an intimation dated April 13, 1979, from the Government of Uttar Pradesh about the revision of royalty from the last fixed rate of Rs. 90 per V. M. T. to Rs. 216 and Rs. 290 per V. M. T. On representations made by the applicant, the said rates were revised by the Government of Uttar Pradesh by an order dated November 5, 1979, to Rs. 145 and Rs. 156 in respect of the supplies made from October 1, 1976, to September 30, 1978, and October 1, 1978, to September 30, 1980, respectively. 3. The applicant disputed the fixation of the royalty by way of a writ petition before the Allahabad High Court {Lucknow Bench) whereupon the Allahabad High Court by an interim order directed the applicant to pay Rs. 110 per V. M. T. during the pendency of the writ petition. ;