1. - This is an income-tax reference application dated February 17, 1981, under Section 256(2) of the Act 1961 (hereinafter referred to as "the Act") arising out of the order of the Income-tax Appellate Tribunal, Jaipur, in Income-tax Appeal No. 1788 (JP) of 1980 and C.O. No. 52/ JP/80.

2. Briefly stated, the facts of the case are that the non-petitioner company initially filed original return declaring an income of Rs. 31,49,270 on August 18, 1976. This was subsequently revised on February 24, 1978, and as per the revised return, the total income was shown at Rs. 3,45,842. In this revised return the assessee claimed Rs. 19,92,263 for contingency provisions and also revised the depreciation chart in relation to which another reference made under Section 256(1) is pending in this court. The assessee claimed to deduct Rs. 19,92,263 being contingency provision, which was disallowed in the earlier years 1974-75 and 1975-76. The Inspecting Assistant Commissioner (Assessment) after examining the claim of the assessee, allowed deduction to the extent of Rs. 5,97,867, vide its assessment order dated March 22, 1979, but disallowed the balance amount claimed of Rs. 13,94,396 on the g