S.C. Sen, J. - (1.) The Tribunal has referred the following question of law to this court under Section 256(1) of the Income-tax Act, 1961 ("the Act") : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the entire sum of Rs. 2,06,953 being the interest, maintenance charge and depreciation payable to the Central Railway was not an admissible deduction in computing the total income for the assessment year 1976-77 ?"
(2.) The assessment year involved is 1976-77 for which the year of account is the year ending on December 31, 1975.
(3.) The facts found by the Tribunal are as under : The assessee is a resident company carrying on business of raising limestone and manufacturing lime from the mines in the State of M. P. The assessment year is 1976-77 for which the accounting year ended on December 31, 1975. In the assessment year, the assessee claimed deduction of Rs. 2,06,953 on account of liability towards maintenance of railway siding relevant to the period November 1, 1963, to December 11, 1973. However, the claim was rejected by the Income-tax Officer for the reason that the assessee should have provided for this liability in the various accounting years in accordance with the mercantile method of accounting followed by it and the assessee has not shown any contingent liability in this regard although the liability was ascertained and known. Hence, he rejected the claim and added back the amount as income of the assessee.;