False factual assumption cannot justify restricting a tax deduction where supporting records were actually produced.

A deduction claim for jute products despatched outside Bihar under section 5(2)(a)(v) of the Bihar Sales Tax Act, 1944 could not be restricted on the basis of an incorrect assumption that no supporting records had been produced. The record showed that relevant documentary evidence had in fact been filed before the departmental authorities, so the disallowance rested on a false factual premise. On that basis, the reference gave rise to a question of law and the assessee was entitled to the full deduction claimed, rather than an estimate-based allowance.

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Issues: Whether the assessee was entitled under section 5(2)(a)(v) of the Bihar Sales Tax Act, 1944 to deduct the full amount claimed in respect of jute products despatched outside Bihar instead of the reduced amount allowed on estimate.

Analysis: The taxing authorities had refused the full deduction on the assumption that no documentary evidence had been produced to support the claim. That assumption was subsequently found to be unfounded, as the assessee had in fact produced relevant records before the departmental authorities. Since the refusal rested on an erroneous factual premise, the reference raised a question of law and the disallowance of the full claim could not stand.

Conclusion: The assessee was entitled to the full deduction claimed under section 5(2)(a)(v) of the Bihar Sales Tax Act, 1944, and the answer was against the State and in favour of the assessee.

Final Conclusion: The deduction allowed only on estimate was held to be inadequate, and the assessee's claim for the full amount succeeded.

Ratio Decidendi: Where a tax authority's disallowance of a claimed deduction rests on a demonstrably false factual assumption, the resulting order is legally unsustainable and the assessee is entitled to the deduction proved by the record.

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