J.V.Gupta, J.

1. At the instance of the revenue, the following question of law has been referred to this court:

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the word expenditure used in Section 40A(3) of the Income-tax Act does not cover expenditure on purr chase of raw material ?"

2. The assessee known as M/s. New Light Tin Manufacturing Company, Sonepat, is a firm engaged in the business activity of manufacturing certain articles from tin plates and selling those articles. The assessment year in question is 1971-72. The assessee was assessed by the ITO on a total income of Rs. 1,38,010 against the returned income of Rs. 77,636.

3. The ITO had disallowed an expenditure of Rs. 43,440 which was stated by the assessee-firm to have been incurred on purchase of tin plates for its manufacturing business, on the plea that the payments in respect of the said expenditure which were exceeding Rs. 2,500 had been made after 31st March, 1969 (the date specified by the Central Government in the notification issued under Section 40A(3) of the Income-tax Act, 1961) (hereinafter referred to as " the Act"), otherwise than by a cr