JUDGMENT

This appeal by the assessee arises out of a reference made by the Income Tax Appellate Tribunal (hereinafter referred to as the Tribunal ) to the Allahabad High Court wherein two questions were referred for opinion. Both the questions have been answered against the assessee and in favour of the Revenue. In the present appeal we are only concerned with question No. 2 which is in the following terms :

"Whether on the facts and in the circumstances of the case the payment of Sales Tax composition fee of Rs. 1,91,887/- was an allowable expenditure for the assessment year 1968-69 ?"

2. The matter relates to the assessment year 1968-69. The assessee deals in the business of manufacture and sale of biris. By notification published in the U.P. Gazette dated December 14, 1957 it was prescribed that no sales tax was payable with effect from December 14, 1957 in respect of biris provided that the additional central excise duties leviable thereon from the close of business on December 13, 1957 had been paid. By another notification published in the same Gazette it was provided that no tax under the Central Sales Tax was payable by any dealer registered under Section 7(3) of the Central