SUDHINDRA MOHAN GUHA, J.

( 1 ) THE instant reference relates to the assessment year 1965-66, for which the previous year ended on 30th June, 1964. Herein the question posed before us is as follows:"whether, on the facts and in the circumstances of the case, the Tribunal was legally right in holding that the amount of Rs. 2,56,529 could not be included in the total incomeof the assessee under Section 41 (1) of the Income-tax Act, 1961?"

( 2 ) DURING the accounting year, the assessee transferred Rs. 3,45,000 out of the suspense account running from 1946-47 to 1948-49 to its capital reserve account. The ITO found that out of the above sum, an amount of Rs. 2,56,529 represented liabilities for expenses which had been allowed in the earlier years. By applying Section 41 of the Act, he included this amount in the total income of the assessee.

( 3 ) WHEN the assessee went up in appeal before the AAC, he confirmed the view taken by the ITO.

( 4 ) THE assessee came in further appeal to the Tribunal and contended that factually the amount included was not correct because the assessee paid back the liabilities with regard to unsecured loans of Rs. 36,000, commission on sugar sales amountin

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