Judgment

KANIA, J.-This is an appeal, on a certificate given under Section 66-A(2) of the Indian Income Tax Act, 1922, against a judgment and order of a Division Bench of the Bombay High Court. The appeal is preferred by the Commissioner of Income Tax and the assessee, the Associated Cement Companies Ltd. is the respondent.

2. The judgment against which the appeal is directed was rendered on a reference under Section 66(1) of the Indian Income Tax Act, 1922. The question referred to the court for consideration was as follows :

Whether on the facts and in the circumstances of the case, the expenditure of Rs 2,09,459, or any portion thereof, incurred by the company in the accounting period relevant to the assessment period 1959-60 was allowable as deduction in determining the profits of the company for the assessment year 1959-60.

3. The relevant facts are as follows :

The assessee, the Associated Cement Companies Ltd. has a chain of factories manufacturing cement ail over the country. The assessment year in question is the year 1959-60 and the corresponding previous year was ended on July 31, 1958. One of the factories of the assessee was situated at Shahabad, which is now in the State