Ajit K.Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1980-81, the following question has been referred to this court : "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in law in holding that the expenses relating to salary and wages and rent would have to be allowed in full and thereby directing the Commissioner of Income-tax (Appeals) to compute the deduction of these two items accordingly"
(2.) Shortly stated, the facts are : The matter arises out of the income-tax assessment of the assessee for the assessment year 1980-81, the accounting period ending on March 31, 1980. The assessee-company was under voluntary liquidation since the Government took over the business of the assessee. The assessee had income only from interest during the year in question. The Income-tax Officer, while assessing the company, disallowed a portion of the assessee's expenditure out of salary and wages (Rs. 50,785) and rent (Rs. 11,726) by observing that the assessee was unable to convince him that all the expenses were incurred for earning its interest income.
(3.) Being aggrieved by the aforesaid order of the Income-tax Officer, the assessee-company went on appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) dismissed the appeal of the assessee by confirming the order of the Income-tax Officer,;