SUHAS CHANDRA SEN, J.

( 1 ) THE Tribunal has referred the following three questions of law to this court under Section 256 (1) of the Income-tax Act, 1961 (for short, "the Act") :"1. Whether, on the facts and in the circumstances of the case, the return signed by the liquidators in the present case is non est in law and in view thereof, the assessment is void ab initio ? 2. Whether, on the facts and in the circumstances of the case, the expenditure of Rs. 92,565 is allowable deduction under Section 57 (iii) of the Income-tax Act, 1961, or otherwise, while computing the total income of the assessee for the accounting period relevant to the assessment year 1976-77 ? 3. Whether, on the facts and in the circumstances of the case, in computing the income of Rs. 1,001 under Section 41 (2) of the Income-tax Act, full effect should have been given to Section 41 (2) read with Section 41 (5) of the Income-tax Act, 1961?"

( 2 ) THE assessment year involved is the assessment year 1976-77, for which the relevant accounting year is the financial year ended March 31, 1976.

( 3 ) THE facts as narrated by the Tribunal in the statement of case are as under : the assessee-company had gone into volu

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