BANERJEE, J.

1. This is a reference under s. 27(1) of the WT Act, 1957.

2. The statement of case related to two asst. yrs.1957-58 and 1959-60, corresponding valuation dates being 31st Dec., 1956 and 31st Dec., 1958.

The assessee is a company doing coal-mining business. In making a return of its net wealth as on the two valuation dates hereinbefore mentioned, the assessee claimed deduction of a sum of Rs. 28,37,282-8-0, representing taxes, penalties, etc., assessed and demanded in the year 1952. It is not disputed that certificates, under the Public Demands Recovery Act, have been issued for recovery of the said amount of Rs. 28,37,282-8-0 and it is not also disputed that notice under s. 7 of the Public Demands Recovery Act, 1913, was served on the assessee and that recovery proceedings were pending on the relevant valuation dates.

3. The WTO disallowed the assessee's claim for deduction of the said amount from the net wealth. An appeal preferred by the assessee, against the assessment order, before the AAC also failed. Thereafter, the assessee, appealed before the Tribunal, which allowed the claim of the assessee in respect of the sum of Rs. 28,37,282, with the following ob