Judgment

GROVER, J.:- This is an appeal by special leave from the judgment of the Calcutta High Court in an Income-tax Reference.

2. The assessee who is the appellant is a public limited company doing the business of jute and manufacturing of jute goods. The method of accounting followed by the assessee is the mercantile system. During the assessment year 1955-56 (the previous year ended on 31st December, 1954), the assessee claimed a deduction of Rs,1,49,776/- on account of sales tax determined to be payable by the sales tax authorities on the sales made by the assessee during the aforesaid previous year. The sequence of dates may be mentioned. The income tax return was filed on 13th January,1956. The demand notice was served by the sales tax authorities on the 21st November, 1957. On 9th November, 1959, the assessee filed a revised return claiming the aforesaid deduction. The assessee had taken the order by which the demand for such tax had been created to the higher departmental authorities, as it was contesting its liability to the extent that had been determined. The Income Tax Officer, however, completed the assessment on 11th March, 1960 before any final decision was given in