  This work reports the first discovery of (negative) spectral lags in the
X-ray emission below 10 keV from the gamma ray binary $LSI +61^{o} $ 303 during
large flaring episodes using the Rossi X-ray Timing Explorer (RXTE)
observations. It is found from the RXTE data that during the flares, low energy
(3-5 KeV) variations lead the higher energy (8-10 keV) variations by few tens
of seconds whereas no significant time lag is observed during the non-flaring
states. The observed spectral lag features for flaring events suggest that
inverse Compton scattering may be operative, at least in some part of the
system. Another possibility is that the sites of particle acceleration may be
different for flaring and non-flaring events such as in the microquasar model
the flaring radiation may come from hot spots sitting above the black hole
while steady state emissions are due to the jets.
