( 1 ) THESE two applications involve identical question and are, therefore, being disposed of by this common order. At the instance of Revenue following question has been referred under Section 256 (1) of the Income-tax Act, 1961 (in short the act ) by Income-tax Appellate Tribunal, Delhi Bench d (in short the Tribunal) for opinion of this Court:

"whether on the facts and in the circumstances of the case, the Tribunal was correct in law in allowing the deductions of Rs. 95,012. 00 and Rs. 43,808. 00 in the computation of the assessee s income from business for the assessment years 1972-73 and 1973-74 respectively"?

( 2 ) FACTUAL position as set out in the statement of case is as follows: For the assessment years 1972-73 and 1973-74 disallowances were made while computing assessee s income from business in respect of damages paid. Assessee was a sole selling agent for sale of sugar of Ajudhya Sugar Mills, a concern of M/s. Lakshmi Ji Sugar Mills Co. P. Ltd. Agency agreement was executed on 1. 1. 1968. Clauses 5 to 7 of the agreement, which have some relevance for present dispute, read as follows:

"5. That the agent shall keep in daily touch with the principals to know