SABYASACHI MUKHARJI, J.

( 1 ) THIS reference relates to the assessment year 1964-65. The assessee is a private limited company and is engaged in the construction work of huge magnitude. The assessment year, as we have stated before, is 1964-65 and the relevant accounting year ended on 30th June, 1963. The assessee got a big contract from the Vizag Port authority for over Rs. 3 crores for construction of four berths of the Port. The contract was awarded during the accounting year relevant to the assessment year under reference, though the construction continued for 3 to 4 years. In order to do this job, the assessee had intimated to the Govt. of India that it should be allowed to import special types of cranes, machinery, dumpers, etc. , from East European countries. The Government, however, insisted upon the assessee to import the aforesaid items from the U. S. A. as could be seen from the letter dated 26th June, 1961, addressed to the assessee by the Superintending Engineer, Vizag Port, The assessee, accordingly, agreed to import the aforesaid items from the USA as could be seen from its letter dated 1st July, 1961, addressed to the Chief Engineer, Vizag Port. Thereafter, in the

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