Ascertained liability for holiday and leave wages can raise a deductible income-tax question of law for reference.

Liability for holiday wages and leave with wages under the Bidi and Cigar Workers (Conditions of Employment) Act, 1966 was treated by the Tribunal as an ascertained liability deductible in computing income, despite no actual payment having been made. The Income-tax Officer had disallowed the deduction on the ground that the amount was unpaid. The High Court noted that, on these facts, the Tribunal's view raised a question of law suitable for reference under section 256(2) of the Income-tax Act, 1961, and directed the Tribunal to state the case and refer the question.

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Issues: Whether the Tribunal was justified in treating the assessee's liability for holiday wages and leave with wages as an ascertained liability deductible in computing income, and whether a question of law arose for reference under section 256(2) of the Income-tax Act, 1961.

Analysis: The assessee claimed deduction for liability arising under the Bidi and Cigar Workers (Conditions of Employment) Act, 1966. The Income-tax Officer disallowed the claim on the footing that no actual payment had been made. The Tribunal, however, treated the liability as ascertained and deductible. On these facts, the court found that the Tribunal's view gave rise to a question of law fit for reference under section 256(2).

Conclusion: The application was allowed and the Tribunal was directed to state the case and refer the question of law to the court.

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