(1.) THESE petitions are under Section 27(3) of the Wealth -tax Act, 1957, to compel reference of two questions, arising out of the orders of the Income Tax Appellate Tribunal, for the opinion of this court. The respondents -assessees are partners of a firm, Abad Fisheries, which is engaged in the export of marine products. The prawns purchased locally were subjected to certain processes before they were exported to foreign countries. The firm claimed exemption from the liability for purchase tax under Section 5A of the Kerala General Sales Tax Act, 1963, in respect of its purchases of prawns, under Section 5 of the Central Sales Tax Act, 1956. But in the apprehension that liability may be cast on it for the purchase tax, the firm made provision in its accounts for the liability for various accounting periods, up to 1988 -89. The question arose under the Income Tax Act, whether the provision so made by the firm was business expenditure deductible under Section 37(1) of the Act. By our judgment rendered today in I.T.R. Nos. 67 and 68 of 1992 (Abad Fisheries v. : [1995]213ITR694(Ker) ), we have held that the firm had every reason to apprehend that they will be made liable for the tax, and that the provision was made reasonably. It was, therefore, held that the amount covered by the provision was deductible in the computation of the profits and gains of the business of the firm.
(2.) THE partners of the firm, who were wealth -tax assessees, had claimed that their shares of the liability so provided were deductible in the computation of their net wealth for purposes of assessment under the Wealth -tax Act. The Tribunal upheld this contention and came to the conclusion that the provision for purchase tax liability was liable to be deducted in computing the net wealth to the extent of the shares of the respective assessees. Arising out of this order of the Tribunal, the Revenue has sought reference of the following questions for the determination of this court :
(3.) HE relies on the decisions of the Supreme Court in CWT v. : [1966]59ITR569(SC) and Kesoram Industries and Cotton Mills Ltd. v. : [1966]59ITR767(SC) .