Dipak Kumar Sen, J. - (1.) The facts found or admitted and the proceedings as on record are, inter alia, that M/s. R. V. Briggs & Co., the assessee, carries on business as chemical analysts. In its business, the assessee employs a number of persons who are divided into five different categories. The assessee follows the mercantile system of accounting.
(2.) Some time in 1968, a dispute arose between the assessee and its employees in respect of the enhancement of the salaries of the latter. The dispute was referred by the Government of West Bengal to the Industrial Tribunal which adjudicated on the dispute and made an award on July 31, 1970. The said award was notified in the State Gazette on August 14, 1970. The assessee and its employees thereafter entered into a settlement in writing on December 12, 1970, modifying the award.
(3.) In the assessment year 1972-73, relevant to this proceeding (the corresponding accounting year being from October 1, 1970, to September 30, 1971), the assessee paid to its employees an additional salary of Rs. 80,663 and claimed deduction of the same as its business expenditure for the year,;