JUDGMENT D.P. Wadhwa, C.J. On an application filed under Section 256 (2) of the Income-tax Act, 1961 (For short ‘the Act’) by the Revenue in the High Court of judicature at Patna, a mandamus was issued to the Income-tax Appellate Tribunal to refer to this Court, the following questions of law for its opinion in respect of the assessment year 1981-82. 1. “Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in allowing deduction of Rs. 17, 78, 313/- 2. Whether on the facts and in the circumstances of the of the case the Income tax appellate Tribunal is justified in allowing the assessee’s claim on account of liability of sale-tax/purchase tax amounting to Rs. 17,78,313 /- as the liability had not crystallized and the same is contingent ?” 2. It is the question no.2 which is relevant for our decision. The assessee is a company registered under the Companies Act. It is in fact a Government Company as defined under Section 617 of the Companies Act. It is a subsidiary of Minerals and Metals Trading Corporation of India Ltd. (MMIS for short), the holding company, which is also a Government Company. 3. The assessee for the assessment year 1981-82 claimed deduction of Rs. 17,78,313/- on account of sales tax/purchase tax. But the same was disallowed by the assessing officer on account of the fact that identical claim was disallowed for the assessment year 1980-81 which was the proceeding year immediately to the assessment year 1982-82. The assesee appealed to the Commissioner of Income-tax (Appeals), who, following the decision of the Tribunal is ITA Nos. 651 and 652/Pat/1982. In the case of the assessee itself directed the assessing officer to allow the deduction. Against the order of the CIT (Appeals), the Revenue same before the Tribunal, who also following its earlier order affirmed the order of the CIT (Appeals) and dismissed the appeal of the Revenue. While deciding the matter, the Tribunal also took into consideration the decision of the Supreme Court in the case of Kedarnath Jute Manufacturing Co. Ltd. Vs. The Commissioner of Income-tax, Central Calcutta : [(1971) 82 ITR, 363]. Reference application of the Revenue under Section 256 (1) of the Act was rejected by the Tribunal. While deciding the matter, the Tribunal also took into consideration the decision of the Supreme Court in the case of Kedarnath Jute Manufacturing Co. Ltd. Vs. The Commissioner of Income-tax, Central Calcutta : [(1971) 82 ITR, 363]. Reference application of the Revenue under Section 256 (1) of the Act was rejected by the Tribunal. Thereafter an application under Section 256 (2) of the Act was filed in the High Court, Patna, and, as noted above, a mandamus was issued to the Tribunal to draws a statement of case and refer to this Court on the aforesaid questions of law for its opinion. 4. The statement of case does not state the facts and, as a matter of fact, except for referring to the orders of the Assessing officer, Commissioner of Income Tax (Appeals) and the orders of the Tribunal in appeal and on an application filed under section 256 (1) of the Act, it says nothing. The questions of law as framed however do indicate as to what was the claim of the assessee and this claim was on account of liability of sales tax/purchase tax was disallowed by the assessing officer on the ground that the liability had not crystalised and that the same was contingent. 5. Mr. Rastogi learned counsel appearing for the Revenue submitted that the Court cannot be behind the statement of fact and in support of his contention he has referred to the decision of the Supreme Court in the case of commissioner of Income tax, Punjab, Haryana -V- Panipat Woolen and General Mills Co. Ltd. [(1976) 103 ITR, 66 SC] where the court says that the High Court was not entitled to go behind the facts stated by the tribunal in the agreed statement or case. Mr. Rastogi also stated that since according to the assessee itself the liability of sales tax/purchase tax was unascertained liability and had not accrued and, therefore, it could not have been allowed as deductions. Reference in this connection was made to a decisions of the Madras High Court in the case of Chandmama Publications Vs. Commissioner of Income tax [(1989) 176 ITR, 321] and of Allahabad High Court in the case of New Victoria Mills Co. Ltd. Vs. Commissioner of Income tax, U.P. [(1956) 61 ITR, 395] Mr. Reference in this connection was made to a decisions of the Madras High Court in the case of Chandmama Publications Vs. Commissioner of Income tax [(1989) 176 ITR, 321] and of Allahabad High Court in the case of New Victoria Mills Co. Ltd. Vs. Commissioner of Income tax, U.P. [(1956) 61 ITR, 395] Mr. Rastogi also relied upon the treatise “The law and Practices of Income by kanga and Palkivala’s-Eighth Edition (page 618) to submit further that generally speaking, a contingent liability was not “expenditure” and, therefore, could not be the subject of deduction even under the mercantile system of accounting. 6. We are however, of the opinion that the case of the assessee is covered by the decision of the Supreme Court in the case of Kedarnath Jute Mfg Co Ltd. Vs. Commissioner of Income-tax (Central) Calcutta [(1971) 82 ITR, 363]. In the case before the Supreme Court, the assessee, which Kept mercantile system of accounting, had claimed deduction of certain amount on account of sales tax determined to be payable on the sales made by it during the calendar year 1954, the previous year relevant to the assessment year 1955-56. The sales tax demand was raised pending the income-tax demand was raised pending the income-tax assessment for that year, the Income-tax Officer rejected the assessee’s claim for deduction of that amount on the ground that-(i) that the assessee had contested the sales tax liability in appeals, and (ii) that it had made no provision in its books with regard to the payment of that amount. The appeal of the assessee to the appellate authority under the Income-tax law contesting its liability to pay sales tax ultimately failed. The Court Held that the moment a dealer made either purchases or sales which were subject to sales tax, the obligation to pay tax arose. It was held further that the assessee was entitled to deduction of the sum claimed being the amount of sales tax which it was liable under the law to pay during the relevant accounting year. The Court Held that the moment a dealer made either purchases or sales which were subject to sales tax, the obligation to pay tax arose. It was held further that the assessee was entitled to deduction of the sum claimed being the amount of sales tax which it was liable under the law to pay during the relevant accounting year. It was held the liability did not cases to be a liability because the assessee had taken proceedings before higher authorities for getting it reduced or wiped out so long at the contention of the assessee did not prevail further the fact that the assessee had failed to debit the liability in its books of account did not debar it from claiming of sum as deduction. The Supreme Court also observed that who their the assessee was entitled to a particular deduction or not would depend on the provision of law relating thereto and not no the view which the assessee might take of this rights: nor can the existence or absence of entries on his books of account be decisive or conclusive in the matter. 7. During the course of hearing it was pointed out by Mr. Katriar, learned counsel for the assessee, that a Division Bench of Andhra Pradesh High Court in T.R.C. No.52 of 1989 and connected matters in the case of the assessee itself titled as Mica Trading Corporation of India Ltd. Vs. The State of Andhra Pradesh decided on August 28, 1995, has held that it was liable to pay sales tax/purchase tax for various years including for the assessment years including for the assessment year is question. The liability to payment of sales tax as held by the Andhra Pradesh High Court in the care of the assessee itself, would support the contention of the assessee of its claim for deduction of sales tax/purchase tax though the same was contingent when such claim was made. We thus answer the questions in affirmative i.e. in favour of the assessee and against the Revenue. There shall be no order as to costs. I agree. Reference answered in favour of assessee