Reserves for un-expired risks are not "accruing liabilities" within the meaning of the explanatory paragraph attached to Rule 2 of Schedule II of the Excess Profits Tax Act, 1940, and therefore, they are not deductible in computing the average amount of capital employed in the business during the relevant chargeable accounting periods.

( 1 ) THIS is an application for leave to appeal to the Supreme Court from a judgment and order of a Division Bench of this Court, dated 10-9-1953, rendered and made upon a reference under Section 21, Excess Profitst Tax Act, read with Section 66a (2) of the Indian Income-tax Act.

( 2 ) THE case has had a history. It appears that assessments of the respondent Insurance Company to Excess Profits Tax for three chargeable accounting periods, namely, those ending on 31-12-1939, 31-12-1940 and 31-12-1941, were taken up at one and the same time and in respect of all the three assessments, a common question of law was raised. That question was whether in computing the average amount of capital, the sums standing to the credit of the Fire Insurance Fund, Marine Insurance Fund, Motor and Accident Insurance Fund and Reserves for Exceptional Losses, could be properly deducted under Rule, 2 Schedule II, read with the explanatory sub-paragraph attached to the Rule in the Excess Profits Tax Act, 1940. The principal contention of the assessee company appears to have been that reserves for un-expired risks could not be held to the "accruing liabilities" within the meaning of the explanatory paragraph, whereas the Taxing authorities contended that they were such liabilities, although the amounts might not have become payable. The tribunal accepted the latter view and held that the amounts in question were liable to be deducted in computing the average amount of capital employed in the business during the relevant chargeable accounting periods.

( 3 ) THREE applications were thereafter made to the Tribunal for a reference to this Court, of the question of law. The Tribunal allowed the application in respect of the chargeable accounting period ending on 31-12-1939, but rejected the two other applications on the ground that they were barred by limitation. Thereupon, the respondent company moved this Court and obtained a Rule under Section 66 (2) of the Act which was ultimately made absolute and the Tribunal was directed to make a reference in respect of the remaining two years as well.

( 4 ) IN pursuance of the order made by this Court, a further reference was made by the Tribunal, but it did so happen that before that reference came up for hearing, the reference previously made with respect to the chargeable accounting period ended on 31-12-1939, had already been heard and decided in favour of the respondent-company. The second reference came up before a Bench, constituted as the present Bench, on 4-5-1951, when directions were given to place the case before the then Chief Justice in order that he might consider whether it would not be desirable to have the present reference also heard by the same learned Judges as had heard the previous reference. We gave that direction for the reason that in case we differed from the other Bench, we would have to make a reference to a Full Bench and if the Full Bench also took a view different from that taken in the first reference, a somewhat anomalous position would result in that in respect of the same question of law, this Court would be speaking in two voices. Pursuant to the direction given by us, the present reference also was placed before the same learned Judges, namely, Mr. Justice Das and Mr. Justice Mookerjee and was heard by them. Mooker-jee, J. , who had delivered the judgment of the Court on the previous occasion, did so in the present case as well and all that he said on the merits of the question was as follows: "this subsequent reference has now been heard. After hearing the further arguments, we are not satisfied that the answers given on the previous occasion need any modification. " It will, therefore, be seen that their Lordships considered the matter to be completely covered by their previous decision and did not find it necessary to add any further reasons or consider specially any further arguments that might have been advanced before them. For the reasons in sup