Chakravartti, C.J. - (1.) This is an application for leave to appeal to the Supreme Court from a judgment and order of a Division Bench of this Court, dated 10-9-1953, rendered and made upon a reference under Section 21, Excess Profitst Tax Act, read with Section 66A(2) of the Indian Income-tax Act.
(2.) The case has had a history. It appears that assessments of the respondent Insurance Company to Excess Profits Tax for three chargeable accounting periods, namely, those ending on 31-12-1939, 31-12-1940 and 31-12-1941, were taken up at one and the same time and in respect of all the three assessments, a common question of law was raised. That question was whether in computing the average amount of capital, the sums standing to the credit of the Fire Insurance Fund, Marine Insurance Fund, Motor and Accident Insurance Fund and Reserves for Exceptional Losses, could be properly deducted under Rule, 2 Schedule II, read with the explanatory sub-paragraph attached to the Rule in the Excess Profits Tax Act, 1940. The principal contention of the assessee company appears to have been that reserves for un-expired risks could not be held to the "accruing liabilities" within the meaning of the explanatory paragraph, whereas the Taxing authorities contended that they were such liabilities, although the amounts might not have become payable. The tribunal accepted the latter view and held that the amounts in question were liable to be deducted in computing the average amount of capital employed in the business during the relevant chargeable accounting periods.
(3.) Three applications were thereafter made to the Tribunal for a reference to this Court, of the question of law. The Tribunal allowed the application in respect of the chargeable accounting period ending on 31-12-1939, but rejected the two other applications on the ground that they were barred by limitation. Thereupon, the respondent company moved this Court and obtained a Rule under Section 66 (2) of the Act which was ultimately made absolute and the Tribunal was directed to make a reference in respect of the remaining two years as well.;