Short Note : 1. The following questions of law were referred under section 256 of the Income Tax Act, 1961 : (1) Whether on the facts and circumstances of the case the assessee was entitled in law to claim as a deduction from its income the whole of the amount of Rs 75,83,183/- as interest payable on the loans taken by it in the assessment year 1957-58 ? (2) Whether the liability of the assessee for payment of interest arose only on 14-5-1957 i.e. on receipt by the assessee of the letter from the State Government informing the assessee of the rates of interest which the State Government had decided to charge ? (3) Whether in any event the quantum of the interest payable by the assessee became ascertainable only on 14-5-1977 or before that date. Held: Soon after the Company was taken over by the Government it became known to the Government that the large sums would have to be advanced to the Company on loan before the Company could start producing the newsprint. It would appear that Government wanted that this venture should succeed as it was calculated to supply one-third of the demand of India's newsprint. The Government also desired that it should not fail as it would otherwise demoralise the investing public. By a letter dated 23rd December 1949 (Annexure D-2) the Government directed the Accountant General to release the loan and also informed that the terms of loan will be communicated later. No rate of interest was proposed by the Government despite the fact that they had by now advanced substantial amount of money running into more than two crores to the company. For the first time by their letter dated 28th February 1952 (Annexure D-3) the Government indicated the rate of interest and the terms on which repayment was to be made by the company. The liability of interest, remained unascertained till May 1957 and this Court thinks that the assessee was justified in treating it as a contingent liability, till then. In case of a contingent liability, the law ii well settled that it need not be claimed until it has ripened into an enforceable liability. The liability of interest, remained unascertained till May 1957 and this Court thinks that the assessee was justified in treating it as a contingent liability, till then. In case of a contingent liability, the law ii well settled that it need not be claimed until it has ripened into an enforceable liability. This Court does not think it would be proper to consider from the view point of a resulting contact by acquiescence in a case of the present nature where Government was keen to help the company so that it come out of its teething trouble and grow into a productive unit supplying the country a vital commodity. Thus, sections 7, 8 and 9 of the Indian Contract Act do not help in arriving at a correct conclusion as, in the instant case, the circumstances as to the implied contract would be wholly out of contract. It follows, therefore, that the answers to the questions would all be in the affirmative and in favour of the assessee. This Court is of the opinion that on the facts of the case, the assessee was entitled to claim as a deduction from its income the whole amount of Rs. 75,80,183/- as interest payable on loans taken by it in the assessment year 1957-1958. The liability of the assessee for payment of interest arose on 14-5-1957 when the assessee received the letter from the State Government informing the interest liability against the company payable to the Government. As regards the third question, this Court finds that the quantum of interest payable by the assessee became ascertainable only On 14-5-1957 and not before the date. Haridas Ranchhoddas v. Mercantile Bank of India, 47 Indian Appeals 17, Krishna Pramanik v. Bhawanipore Banking Corporation Ltd., ILR 59 Calcutta 662, Goddarwal v. Tata Industrial Bank, ILR 49, Allahabad 674, referred to.