O.Chinnappa Reddy, J.

1. The Income-tax Appellate Tribunal, Chandigarh, has referred the following question for our consideration :

" 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 purchase of raw material ?"

2. The assessee manufactures shapers and castings of machines. Raw material was purchased from M/s. Ludhiana Crucible & Cupola Association on various occasions and, on as many as five occasions in the course of the accounting year 1969-70, payment was not made by crossed cheque or crossed bank draft. It was not shown that there was any business expediency for making the payments in cash. The Income-tax Officer disallowed the payments under Section 40A(3). The order of the Income-tax Officer was affirmed by the Appellate Assistant Commissioner. Before the Income-tax Appellate Tribunal, it was urged on behalf of the assessee that payments made for the purchase of raw material or goods was not expenditure-within the meaning of Section 40A(3) since the amount expended did not leave the assessees books irretrievably but c