1. ' SAEEDUZZAMAN SIDDIQUI, J.--By this application under Section 66 (2) of Income Tax Act, 1922, the Department has referred the following question to this Court for decision: "Whether on the facts and circumstances of the case, the learned I.TA. Tribunal was justified in treating cancellation charges on forward contracts in foreign exchange as revenue expenditures."
2. ' In the statement of facts filed in support of the application it is stated that in the assessment year 1972-73 the respondent had claimed a sum of Rs,35,112 as allowable expenses from the gross-profit of the Company for the said year. The Income Tax Officer disallowed the claim and added back the amount to the profit, holding, firstly that the loss claimed on account of forward purchase of foreign exchange was of a 'speculative nature' and, secondly, it was an expense of capital nature and as such it was not allowable under Section 10 of the Income Tax Act. Against the order of the Income Tax Officer, the assessee/respondent filed an appeal before the Appellate Assistant Commissioner who upheld the order of the Income Tax Officer and maintained the disallowance of the sum of Rs, 35,112 towards allowable revenue expenses, both on the ground that the transaction was of speculative nature and the above amount expended by the assessee was of a capital nature. The assessee then filed a second appeal before the Appellate Tribunal which reversed the order of the lower Tribunal holding that there was no justification for holding the transaction involving forward purchase of foreign exchange as one of speculative nature and, secondly, the Tribunal took the view that the amount of Rs,35,120 was incurred in connection with the normal activity of business of the respondent as such it was allowable as expense of revenue nature under Section 10 of the Act.
3. The Department then approached the Tribunal for making a reference to this Court for decision on the a bove noted question of law but the Tribunal declined the request of department on the ground that no legal question arises in the case for making a reference. Thereafter, the department filed the above application referring the above-noted question directly to this Court for decision under Section 66 (2) of Income-tax Act. Mr. Shaikh Haider, the learned counsel for the Department has firstly, urged that there was no justification for the finding by the Tribunal that the amount of Rs,35,120 was spent by the assessee/respondent in connection with the normal conduct of their business. It is very vehemently urged by the learned counsel that the aforesaid amount was an expenditure of capital nature which was not allowable as an expense under Section 10 of the Act.
4. The learned counsel for the respondent on the other hand supported the order of the Tribunal and contended that finding of the Tribunal on a question of fact is binding on this Court unless it is specifically challenged on the ground of perversity or non-existence of evidence to support the finding. It is accordingly contended by the learned counsel for the respondent that the question referred in the application does not arise in view of the findings of Tribunal on the factual aspect of the case which has gone unchallenged. The contention of the learned counsel for the respondent is not without force and after hearing the learned counsel for the applicant as well as respondent, we are of the view that the question as framed and referred to us for decision necessarily depends upon a finding by us on the fact that whether the eependiture of Rs,35,120 incurred by the respondent/assessee during the assessment year 1972-73 was an expense of revenue nature or was a capital expenditure. This aspect of the case has been determined by the Income Tax Appellate Tribunal in favour of the assessee/respondent and it is categorically held that the aforesaid expenditure was of revenue nature and as such it was allowable under Section 10 of the Income-tax Act as expense. We have gone through the statement of fact filed by the Department in support of the application and we find the above finding of fact by the Tribunal has not been challenged. On the face of the above finding of fact by the Tribunal the question referred to us is wholly misconceived.
5. ' We accordingly dismiss this reference as misconceived. There will be no order as to costs.