( 1 ) THE following question of law has been referred at the instance of the Commissioner of Income-tax under Section 256 (1) of the I. T. Act, 1961:"whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 66,964 appropriated towards 'reserve for contingencies' is an allowable deduction in computing the assessee's business income from electric supply undertaking. "

( 2 ) THE facts relevant for this question stated by the Tribunal are as under:"the assessee is an electric supply undertaking engaged in the business of generation and distribution of electricity and is governed by the Electricity (Supply) Act, 1948. As per paragraphs III to V of the Sixth Schedule to the aforementioned Act, it had to create a reserve called "contingencies Reserve", to be utilised for the purposes set out in paragraph V of the said Sixth Schedule. In compliance with the provisions of the said Act, the assessee-company appropriated an amount of Rs. 66,964 towards "reserve for contingencies" and deducted that amount in the computation of its taxable income of the previous year relevant to the assessment year 1973-74, For the