Ajit K.Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, made at the instance of the Revenue, the following question has been referred for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the liability to pay the arrear rent and cess of Rs. 4,13,666 arose in the accounting year relevant to the assessment year 1976-77 and, therefore, it was an admissible deduction in the aforesaid assessment year."
(2.) The facts which, are admitted and/or found by the Tribunal are as under : The assessee, a public limited company, carries on business in the manufacture and sale of tea. It owns a tea garden which is situated in the State of West Bengal. The assessee follows the mercantile system of accounting. The previous year of the assessee relevant to the assessment year 1976-77, which is now in reference before this court, commenced on March 1, 1975, and ended on February 28, 1976.
(3.) In the course of the assessment proceedings for the said year, the assessee claimed deduction in respect of rent and cess for the earlier years aggregating to Rs. 4,13,666 in all, payable by it to the Government of. West Bengal for its Teesta Valley Tea Garden in terms of an agreement entered into by and between the assessee and the State Government on March 13, 1975.;