1. SOHANI, J.--This is an application under section 256(2) of the I.-T. Act, 1961 (hereinafter referred to as "the Act").
2. The applicant assessee is a partnership firm registered under the Act. For the assessment year 1972-73, for which the accounting period ended on 31st December 1971, the assessee contended that the amount of Rs. 26,271, which was paid by the assessee to the employee of Raj Theatre on account of retrenchment compensation payable under the provisions of the Industrial Disputes Act, 1947, was an allowable expenditure in computing the income of the firm. The claim of the assessee was, however, rejected by the I. T. O. On appeal, the A. A. C. Upheld the finding of the I. T. O.
3. In this behalf. On further appeal, the Tribunal held that the expenditure incurred by the assessee could not be said to be an expenditure laid out and incurred wholly and exclusively for the purpose of business. In this view of the matter, the Tribunal dismissed the appeal. An application for making a reference file! By the assessee was also rejected by the Tribunal. Hence, the assessee has filed this application.
4. Having beard learned counsel for the parties, we have come to conclusion that a question of law dies arise as to whether the rum Rs. 26,271 constituted an allowable expenditure in computing the income of the firm for the assessm ent year 1972-73. The application is, therefore allowed, and we direr the Tribunal to state the cast and refer the following question of law to this Court for its opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the expenditure amounting to Rs. 26,271 incurred by the assessee on account of retrenchment compensation was not a revenue nature and did not constitute an allowable expenditure in computing the income of the assessee for the assessment year 1972-73 ?"
5. M. Z. M.