- (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, 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 right in holding that the liability of Rs. 57,103 was allowable as a deduction for the assessment year 1967-68 ?"
(2.) The assessment year involved is 1967-68 for which the relevant accounting year is the year ending September 30, 1966. The assessee is a company which is engaged in the business of hiring out navigation receivers and equipment to its various customers in India. Such navigation receivers and equipment are in turn taken on hire by the assessee from Dacca Navigation Concessions Ltd., London (hereinafter referred to as the "London company"), vide an agreement dated December 19, 1961.
(3.) The dispute before the Tribunal was in regard to an additional liability arising from the devaluation of Indian currency on June 6, 1966. The Income-tax Officer disallowed the said additional liability due to devaluation of Indian currency on June 6, 1966, amounting to Rs. 57,103 because, in his opinion, the said sum represented a provision in the accounts towards the difference in exchange in respect of liabilities to the principals and accordingly as no remittance had been made during the year under consideration by the assessee the said provision could not be allowed as a deduction.;