Ajit K. Sengupta, J. - (1.) At the instance of the Commissioner of Income-tax, West Bengal-III, the following two questions of law have been referred to this court under Section 256(2) of the Income-tax Act, 1961, for the assessment year 1969-70 : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal ignored relevant materials and relied on irrelevant materials in holding that the assessee had followed any regular method of accounting in respect of the expenses incurred on account of stowing and fire protection and whether such finding was otherwise unreasonable or perverse ? (2) If the answer to question No. (1) is in the affirmative, then, whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the expenses which were not actually incurred during the previous year relevant to the assessment year 1969-70 should be allowed to be deducted in computing the profits and gains of business assessable for the said assessment year."
(2.) The facts leading to this reference are that in proceedings for the assessment to tax for the assessment year 1969-70, the assessee claimed deduction of Rs. 1,35,646 with reference to expenses relating to fire protection amounting to Rs. 67,331 and stowing amounting to Rs. 68,516. The assessee claimed these amounts in the following manner : A/C Fire Protection JUDGEMENT_135_ITR177_1989Html1.htm
(3.) It was submitted before the Income-tax Officer that the expenses incurred and the amount received against them as reimbursement from Coal Board were shown in the following manner and the balance which had not been reimbursed was written off and debited to the profit and loss account: JUDGEMENT_135_ITR177_1989Html2.htm;