BY THE COURT :

1. The High Court declined to call for a reference, at the behest of the Revenue, of the following question :

"Whether the Tribunal is right in law and on facts in directing the AO to allow the claim of the assessee in respect of unpaid sales-tax if the same was covered by the specific scheme of the Gujarat Government whereby the deferred payment scheme was converted into interest-free loan particularly when the provisions of s. 43B are retrospective in operation "

2. Earlier, the Tribunal had declined such reference replying on its own judgment in Morvi Horological Industries vs. ITO 1991 (39) TTJ(Ahd) 4 : 1991 36 ITD 115 (Ahd), reference wherefrom had been declined, and upon a CBDT, Circular dt. 25th September, 1987, reported in 1988 (68) CTR(St) 109 : 1988 (169) ITR(St) 53.

3. We have been shown the said circular and it is clear that its provisions would apply only if a State Government had amended its ST Act to provide that the sales-tax that was deferred under an incentive scheme framed by it would be treated as actually paid, so as to meet the requirements of s. 43B of the IT Act, 1961. Notice does not appear to have been taken of the Gujarat ST Act, to ascertain whether or not there was such an amendment. A question of law, therefore, clearly arises and it must be considered by the High Court.

4. The appeals are allowed. The order under appeal is set aside. The question quoted above shall be referred by the Tribunal to the High Court for consideration, after drawing up a statement of case.

5. No order as to costs.