Grover J. ( 1 ) THIS is a petition under section66 (2) of the Income-tax Act, 1922, for an order directing the Income-tax Appellate Tribunal to state the case. According to the allegationsin the petition the petitioner is a limited company having its registered office at Delhi and Branch sant Kanpur, Calcutta and Kalka. Theasseessee along with some twenty and odd persons formed an associationcalled the Iron and Steel Stockists (Civil Supplies) Association for thepurpose of purchase and sale of disposal goods from the Governmentof India prior to the partition of the country. A sum of over Rs. 8. 39 lics is said to have been deposited in this connection with thegovernment but owing to the partition of the country it appears thateither the allotment did not take place or delivery of the goods wasnot effected. As a result of the same the assessee got back from theassociation the above amount less certain expenses. A sum of Rs. 5256/- related to such expenses for the assessment year 1957-58. The assessee claimed that this sum should be a lowed as businessexpenses or as a loss in the nature of a bad debt. The Income-taxofficer as well as the Appellate Assistant Commissioner disallowedthe deduction on the ground that it was a loss of capital. The Incometax Appellate Tribunal affirmed their decision. The other deductionswhich had been claimed related to certain legal expenses said to havebeen incurred by the assessee in connection with its business. Thefirst was a sum of Rs. 550. 00 representing the legal expenses incurredin defending a suit filed by the former Manager Director of the assesseecompany. The Managing Director had been removed from his officeand he had filed the suit claiming that his removal was illegal. Theassessee defended that suit and incurred the expenses connected withit. Two more items of expenses amounting to Rs 825. 00 and Rs. 385. 00. are stated to have been incurred in connection with two criminal casesfiled against the Managing Director, the allegation being that he hadmisappropriated and embezzled certain funds belonging to the assessecompany etc. The Tribunal disallowed these items also. Two more items of expenses amounting to Rs 825. 00 and Rs. 385. 00. are stated to have been incurred in connection with two criminal casesfiled against the Managing Director, the allegation being that he hadmisappropriated and embezzled certain funds belonging to the assessecompany etc. The Tribunal disallowed these items also. ( 2 ) THE questions of law which were sought to be referred areas follows: - " (1) Whether on the facts and circumstances of the case, theamount of Rs 5,256/- deducted by M/s Iron and Steel Stockists (Civil Supplies) Association Delhi, is a proper deduction fromthe business income of the assessee as business loss, bad debtor business expense ? (2) Whether legal expenses of Rs 550/- incurred by the assesseein defending a suit filed by its former Managing Director for adeclaration that his removal was illgal and ha continued asthe Managing Director were admissible deduction from businessincome ? (4) Whether law charges of Rs. 825. 00 and Rs. 385. 00 incurred bythe assessee Company in connection with criminal complaintsagainst the former Managing Director for misappropriation ofcompany s funds and efforts to take forcible possession ofcompany s business premises respectively are a permissiblededuction from business profits of the assessee company 7the Tribunal having refused to make the reference under section 66 (1 ). the present petition has been filed. ( 3 ) MR. S. N. Andley contends that the first question is clearlyone which arises from the order of the Tribunal and it is essentiallya question of law which ought to have been retened. The Tribunalexpressed the view that the amouat of Rs. 5,226. 00 merely representedloss of capital and as there was no trading activity, no deductioncould be allowed. Mr Andley submits that it was pursuant to thetrading activity of the assessee that the goods were sought to beacquired for which a deposit of 8. 39 lacs was made and if forsome reasons beyond the control of the parties the goods could notbe delivered and the amount was refunded after deducting the expenses it could not be said that it was a capital loss and was not a lewable in trading activity. It is obvious from the contentions raised/that the first question is one of law and ought to have beenreferred. ( 4 ) AS regards the other two questions also, Mr. It is obvious from the contentions raised/that the first question is one of law and ought to have beenreferred. ( 4 ) AS regards the other two questions also, Mr. Andley has pointedout that the expenses incuried in the criminal and civil litigation were connected with and related to the business of the assessee company. According to him, it was in the interests of the asseesse to. defend the suit as also to prosecute the criminal complaints aganstthe former Managing Director for misapprepriating the funds of theassessee company and for taking forcible possession of the company sbusiness premises. Mr. Hardy has not been able to show these questions are not of law and the Tribunal was justified in decrimingto refer them. ( 5 ) IN the result, this petition is allowed and we direct that amandamus be issued to the Appellate Tribunal to state the case andrefer to this Court the three questions of law mentioned above. Keeping in view the entire circumstances we leave the parties to bear theirown costs. ( 6 ) I agree.