( 1 ) IN this reference under Section 256 (2) of the I. T. Act, 1961, the following question, as directed by this court, has been referred to this court :"whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the liability to pay additional bonus in the sum of Rs. 1,32,795 did not arise in 1969 and the said sum was not, therefore, allowable as a deduction in the assessment year 1970-71 ?"

( 2 ) IN order to appreciate the question, it would be necessary to refer to certain facts. The assessment year involved is 1970-71, which covers the calendar year 1969. The ITO disallowed the assessee's claim for Rs. 1,32,795 on the ground that it was a provision for an ex gratia compensation and that the liability was neither ascertained nor quantified. There was an appeal from the said order of the ITO before the AAC. Before we mention anything about that, it may be mentioned that, as for income-tax assessment purpose, the business loss was computed at Rs. 1,97,350. It was further contended on behalf of the assessee, before us, that the business loss was computed after disallowance of certain amount and after allowing deprecia