( 1 ) THE following question has been referred at the instance of revenue and statement of case has been submitted by the Tribunal to this Court on an application made under Section 256 (1) of the Income Tax Act by the Commissioner of Income Tax in respect of assessment for the assessment year 1977-78 in the case of respondent assessee:"whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the sum of Rs. 89,722. 00 paid as know-how fees to the foreign collaborator by the assessee was an allowable expenditure for the assessment year in question?"

( 2 ) THE facts and circumstances in which the aforesaid question has been referred to this court are that a sum of Rs. 89,722. 00 paid by the assessee to its foreign collaborator as technical-knowhow fees during the previous year relevant to assessment year 1976-77 was not allowed as deduction by the assessing officer on the ground that the liability to pay had arisen during the previous year relevant to assessment year 1975-76 and assessee is not entitled to claim the same on the payment basis for the assessment year 1976-77 as he is maintaining his accounts o