SUHAS CHANDRA SEN, J. ( 1 ) THE Tribunal has referred the following questions of law to this court under Section 256 (2) of the Income-tax Act, 1961 :"1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the sum of Rs. 5,72,073 (pertaining to the assessee-company out of the sum of Rs. 25 lakhs) paid to Girdharilal Sardarmal in connection with the supply of cereals to the workers of the tea estates was not allowable as a trading loss for the assessment year 1975-76 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal acted judicially in declining to admit the specific ground that the sum of Rs. 5,72,073 was allowable as additional cost of cereals in connection with the supply to the estate workers during the assessment year 1975-76 ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 5,72,073 was not an ascertainable liability sp as to be allowable in the assessment year 1975-76 and could be allowed only in the year in which the disputes between Girdharilal Sardarmal and Warren Tea Group companies are finally settled ?" ( 2 ) THE assessment year involved is 1975-76 for which the accounting period was the year ended on December 31,1974. ( 3 ) THE facts found by the Tribunal are that the assessee-company was one of the companies of the Warren Tea Group. ( 3 ) THE facts found by the Tribunal are that the assessee-company was one of the companies of the Warren Tea Group. By an agreement dated July 1, 1972, between the Warren Tea Group of companies including the assessee and one Girdharilal Sardarmal, the latter was appointed as their handling agent for supply of foodgrains allotted from the Government store for consumption by the workers of the tea estates of the former including the assessee on the terms and conditions mentioned in the said agreement According to those terms, the allotment of foodgrains was to be made by the Government of Assam at the instance of the Grain Distributing Officer, Dibrugarh Circle, ABITA, in the name of the said Girdharilal Sardarmal and the said party had to lift the foodgrains directly from the sources allotted by the Government with the finance provided by the Warren Tea Group of companies including the assessee through the said Grain Distributing Officer and store the foodgrains in their godown at Dibrugarh with proper care and at their own cost. The said Girdharilal Sardarmal was to supply rice or atta to the said Warren Tea Group of companies including the assessee as per the requirements of the Group Grain Distributing Officer and was to be paid by the Central Office, Warren Tea Group, at the rates set forth in the schedule thereto within seven days of the respective estate manager acknowledging receipt of the aforesaid rice or atta. The said Gir-dharilal Sardarmal was to lift the allotment of the foodgrains as may be made by the said Government and was to take necessary steps to obtain despatch of rice and atta to the Group's estate including the assessee so as to ensure regular supply of the aforesaid foodgrains according to the requirements of the Group Grain Distributing Officer. For the services so rendered, the said Girdharilal Sardarmal was entitled to a certain percentage on account of shrinkage of the allotted foodgrains that may take place during transporting, handling and storing of the foodgrains detailed in para 9 hereof, besides transporting charges, etc. , also detailed in the schedule to the said agreement. For the services so rendered, the said Girdharilal Sardarmal was entitled to a certain percentage on account of shrinkage of the allotted foodgrains that may take place during transporting, handling and storing of the foodgrains detailed in para 9 hereof, besides transporting charges, etc. , also detailed in the schedule to the said agreement. The said agreement also contained an arbitration clause to the effect that if any dispute or difference arose at any time regarding the said agreement or any matter arising thereunder, then the said dispute was to be referred to the arbitration of a mutually acceptable arbitrator whose award is to be binding on the said parties. ( 4 ) ALLEGING that the said handling agent, Girdharilal Sardarmal, because of the fiduciary relationship created under the said agreement, had acquired diverse quantity of rice, paddy and atta for which they had been paid by the Warren Group of Tea companies including the assessee, had stopped supplying any foodgrains as agreed upon under the said agreement on or from June 21, 1974, and in this way committed criminal breach of trust, falsification of accounts and cheating both in regard to foodgrains and money, the Warren Group of companies including the assessee terminated the aforesaid agreement. The supply of foodgrains by the said handling agent had become very irregular from May, 1974. By a letter dated July 9, 1974, the Central Office Manager of Warren Group of Tea companies and the Grain Distributing Officer, Dibrugarh, ABITA, filed criminal complaints against the said handling agent, respectively, on October 7, 1974, and October 3, 1974, with the Chief Judicial Magistrate at Dibrugarh. Those complaints were followed by Suit No. 21 of 1975 by the said Warren Group of Tea companies including the assessee against the said handling agent, Girdharilal Sardarmal, for the recovery of Rs. 18,54,523. 98 with interest, costs, etc. The amount of Rs. 18,54,523. 98 was stated to represent the amount advanced by the Warren Group of Tea companies including the assessee to the said, handling agent between July, 1972, and January, 1974, for procurement of the foodgrains which, according to the said Group, the defendant had not procured and/or supplied and so the said claim in respect of the said amount of Rs. 18,54,523. 98 represented money received by the said handling agent for the use of the said Group. 18,54,523. 98 represented money received by the said handling agent for the use of the said Group. This suit of the assessee was met by the said handling agent by an application under Section 34 of the Arbitration Act, 1940, as, according to them, the dispute involved in the said suit was covered by the arbitration clause referred to above in the agreement between the parties dated July 1, 1972. It was also urged that the High Court of Judicature at Calcutta had no jurisdiction to hear the suit because the aforesaid agreement was subject to Dibrugarh jurisdiction. This application under Section 34 of the Arbitration Act, 1940, of the said handling agent was, as admitted by the parties at the time of the hearing of this appeal, accepted by the Calcutta High Court and the aforesaid suit by the Warren Group of Tea companies including the assessee was stayed. The appeal against the decision of the honourable single judge also as admitted by the parties at the hearing of the appeal has since been dismissed by the Division Bench. ( 5 ) FURTHER, it is also an admitted position, as is clear from the letter of the said handling agent, Girdharilal Sardarmal, dated July 15, 1974, at page 77 of the paper book filed by the assessee with annexure at pages 78 and 79, that, according to them, nothing was due by the said party to the Warren Group of Tea companies including the assessee. Rather, a sum of Rs. 3,14,130. 75 was due to the said handling agent from the Warren Group of Tea companies and Zaloni Tea Estates, vide composite statement at page 79. We also find that the said handling agent, in their petition filed on May 19, 1975, verified by the affidavit of Bhawani Shankar Bagaria affirmed on May 7, 1975, has taken the stand that they had duly performed their part of the contract as envisaged in the aforesaid agreement dated July 1, 1972, and that large sum of moneys were due and owing by the Warren Group of Tea companies including the assessee to them. It was further stated that it was untrue that any amount was payable by the said handling agent to the Warren Group of Tea companies, as alleged in the plaint of the aforesaid suit filed by them against Girdharilal Sardarmal. It was further stated that it was untrue that any amount was payable by the said handling agent to the Warren Group of Tea companies, as alleged in the plaint of the aforesaid suit filed by them against Girdharilal Sardarmal. Further, we find, from the written statement filed by the said handling agent in Suit No. 31 of 1975, filed by Dekhari Tea Co. Ltd. , that the stand of the said handling agent is that the Warren Tea Group has no claim against them. On the contrary, they owed to the handling agent a sum of Rs. 3,14,130. 75 together with interest. ( 6 ) ON the above facts, the Income-tax Officer held that the claim of the assessee of loss of Rs. 5,72,073 was premature because, according to him, there was no evidence that the above sum has been lost to the assessee or had become a loss in the previous year, more so when the civil and criminal litigations against the said handling agent were then pending. This order of the Income-tax Officer was prior to the decision of the single judge on the application made by the said handling agent under Section 34 of the Arbitration Act and the decision of the appeal court against the said order passed under Section 34 of the Arbitration Act, 1940. ( 7 ) THE assessee went up in appeal before the Commissioner of Income-tax (Appeals)-VI who held that the agreement with Girdharilal Sardarmal was terminated in 1974 and the civil suit for recovery of the amount was filed by the appellant in the subsequent year and, therefore, there is no ground to hold that loss was incurred by the appellant in 1974 itself. ( 8 ) THE assessee preferred a further appeal to the Tribunal. Before the Tribunal, two points were urged. It was urged that the loss of Rs. 5,72,073 arose in the course of supply of foodgrains to the tea estate workers through the handling agent and the expenditure was incidental to the carrying on of the assessee's business and the loss was allowable as a trading loss. Alternatively, it was sought to be argued that the amount should be allowed, if not as a trading loss, as additional cost in connection with the supply of foodgrains to its employees. The Tribunal was of the view that the second point cannot be allowed to be urged. Alternatively, it was sought to be argued that the amount should be allowed, if not as a trading loss, as additional cost in connection with the supply of foodgrains to its employees. The Tribunal was of the view that the second point cannot be allowed to be urged. On the first point, the Tribunal held that it was not proved that the assessee had incurred the alleged loss of Rs. 5,72,073 in the year under consideration as claimed. ( 9 ) DR. Pal, on behalf of the assessee, has contended that there is no dispute that the expenditure was incurred by the assessee. There is no dispute that money was given to the handling agent, Girdharilal Sardarmal, for the purpose of purchasing foodstuff for the workers of the various tea estates of the company. The claim of Girdharilal Sardarmal which has been annexed to the paper book is that it has a claim against the assessee-company. The claim of Girdharilal Sardarmal is not that it has not received the money from the assessee-company. On the contrary, its claim is that it has received the money but it has spent a larger amount on account of the company which makes the company indebted to Girdharilal Sardarmal. Dr. Pal's contention is that, in the context of these facts, whether Girdharilal Sardarmal has a claim against the assessee-company or not becomes quite immaterial. What is to be seen is whether the company has incurred this expenditure or not. If the company has incurred this expenditure, then it cannot be disputed that the expenditure has been wholly and exclusively incurred for the purpose of the company's business. ( 10 ) IN my opinion, the contention of Dr. Pal must be upheld. If the expenditure has been incurred for the purpose of feeding the workers through the handling agent, Girdharilal Sardarmal, then the expenditure has to be allowed as wholly and exclusively incurred for the purpose of the asses-see's business. Whether the money was property utilised for feeding the workers or not by the handling agent will not make any difference to this position. The fact is that the expenditure was incidental to the carrying on of the business. ( 11 ) DR. Pal has further contended that the entire expenditure was incurred in this particular year of account. Whether the money was property utilised for feeding the workers or not by the handling agent will not make any difference to this position. The fact is that the expenditure was incidental to the carrying on of the business. ( 11 ) DR. Pal has further contended that the entire expenditure was incurred in this particular year of account. In our view, the Tribunal should re-examine the case and decide whether the expenditure is allowable as expenditure wholly and exclusively incurred for the purpose of the assessee's business in the relevant year of account. ( 12 ) WE, therefore, decline to answer the question referred to us. We remit the case to the Tribunal to decide the case afresh in accordance with law. The Tribunal will be entitled to take evidence to decide the controversy or pass such other orders as it thinks fit in accordance with law.