Suhas Chandra Sen, J. - (1.) The Tribunal has referred the following questions of law to this court under Section 256(2) of the Income-tax Act, 1961 : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the sum of Rs. 5,72,073 (pertaining to the assessee-company out of the sum of Rs. 25 lakhs) paid to Girdharilal Sardarmal in connection with the supply of cereals to the workers of the tea estates was not allowable as a trading loss for the assessment year 1975-76 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal acted judicially in declining to admit the specific ground that the sum of Rs. 5,72,073 was allowable as additional cost of cereals in connection with the supply to the estate workers during the assessment year 1975-76 ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 5,72,073 was not an ascertainable liability sp as to be allowable in the assessment year 1975-76 and could be allowed only in the year in which the disputes between Girdharilal Sardarmal and Warren Tea Group companies are finally settled ?"
(2.) The assessment year involved is 1975-76 for which the accounting period was the year ended on December 31,1974.
(3.) The facts found by the Tribunal are that the assessee-company was one of the companies of the Warren Tea Group. By an agreement dated July 1, 1972, between the Warren Tea Group of companies including the assessee and one Girdharilal Sardarmal, the latter was appointed as their handling agent for supply of foodgrains allotted from the Government store for consumption by the workers of the tea estates of the former including the assessee on the terms and conditions mentioned in the said agreement According to those terms, the allotment of foodgrains was to be made by the Government of Assam at the instance of the Grain Distributing Officer, Dibrugarh Circle, ABITA, in the name of the said Girdharilal Sardarmal and the said party had to lift the foodgrains directly from the sources allotted by the Government with the finance provided by the Warren Tea Group of companies including the assessee through the said Grain Distributing Officer and store the foodgrains in their godown at Dibrugarh with proper care and at their own cost. The said Girdharilal Sardarmal was to supply rice or atta to the said Warren Tea Group of companies including the assessee as per the requirements of the Group Grain Distributing Officer and was to be paid by the Central Office, Warren Tea Group, at the rates set forth in the schedule thereto within seven days of the respective estate manager acknowledging receipt of the aforesaid rice or atta. The said Gir-dharilal Sardarmal was to lift the allotment of the foodgrains as may be made by the said Government and was to take necessary steps to obtain despatch of rice and atta to the Group's estate including the assessee so as to ensure regular supply of the aforesaid foodgrains according to the requirements of the Group Grain Distributing Officer. For the services so rendered, the said Girdharilal Sardarmal was entitled to a certain percentage on account of shrinkage of the allotted foodgrains that may take place during transporting, handling and storing of the foodgrains detailed in para 9 hereof, besides transporting charges, etc., also detailed in the schedule to the said agreement. The said agreement also contained an arbitration clause to the effect that if any dispute or difference arose at any time regarding the said agreement or any matter arising thereunder, then the said dispute was to be referred to the arbitration of a mutually acceptable arbitrator whose award is to be binding on the said parties.;