Judgment

Sen, J.-The Tribunal referred the following question of law to the Andhra Pradesh High Court under Section 256(1) of the Income Tax Act, 1961.

“1. Whether on the facts and in the circumstances of the case, a sum of Rs. 2,95,000/- has to be taken into account in computing the income of the assessee from business under the provisions of Section 28 of the Income Tax Act, 1961?

If the answer to the above question is in the negative-

Whether on the facts and in the circumstances of the case, the claim of Rs. 2,95,000/- is covered by sub-rule (j) of Rule 6-DD, framed under Section 40A(3) of the Income Tax Act, 1961?”

2. “Whether on the facts and in the circumstances of the case, the sum of Rs. 19,659/- incurred as quest-expenses is allowable as a deduction?”

2. The assessee, to start with, was a partnership consisting mostly of family members. In 1965, it was converted into a public limited company to carry on the business of export of tobacco. The first directors appointed at the time of incorporation were to hold office during their lifetime or until they resigned voluntarily.

3. On the basis of the information received, a search was conducted by the Enforc