Deductibility of ascertained liability raised a question of law, so reference under income-tax law was directed.

The Tribunal's finding that the assessee's liability for holiday wages and leave wages under the Beedi and Cigar Workers (Conditions of Employment) Act, 1966 was an ascertained liability deductible in computing income gave rise to a question of law. The Madhya Pradesh High Court held that the character and deductibility of the liability were legal issues arising from the Tribunal's order, making the matter fit for reference under section 256(2) of the Income-tax Act, 1961. The Revenue's application was allowed and the Tribunal was directed to state the case and refer the question of law to the Court.

---

---

Issues: Whether the Tribunal's order gave rise to a question of law warranting a reference under section 256(2) of the Income-tax Act, 1961.

Analysis: The application concerned the Revenue's request for reference on the tax treatment of the assessee's liability for holiday wages and leave wages under the Beedi and Cigar Workers (Conditions of Employment) Act, 1966. The Court found that the Tribunal's conclusion that the amount constituted an ascertained liability and was deductible in computing income raised a question of law arising from the order.

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

Ratio Decidendi: Where the Tribunal's order raises a substantive question on the character and deductibility of a liability, a reference must be directed under section 256(2) of the Income-tax Act, 1961.

---