ORDER
Dr. B.P. Saraf, J.
1. By this reference under s. 256(1) of the IT Act, 1961, the Tribunal has
referred the following questions of law to this Court for opinion :
“1. Whether, on the facts and in the circumstances of the case,
the Tribunal was justified in holding that the provision for gratuity has to be allowed
as a deduction in computing business income of the assessee for the asst. yr. 1972-
73 ?
2. Whether, on the facts and in the circumstances of the case, the income,
profits and gains of the assessee from the contract business should be assessed on
accrual basis in a year when a particular contract is completed or in each accounting
year on the basis of work- in-progress?
3. Whether, on the facts and in the circumstances of the case, the income,
profits and gains of the assessee could properly be deduced from the method of
accounting adopted by the assessee in showing the profit in a year when the
contract was completed?”
2. It is agreed by the counsel for the parties that the first question is covered by
the decision of this Court in Tata Iron & Steel Co. Ltd. vs. D.V. Bapat, ITO (1975) 101
ITR 292 (Bom). Following the same, we answer the said question in the affirmative,
i.e., in favour of the assessee and against the Revenue.
3. So far as the question Nos. 2 & 3 are concerned, the controversy therein
pertains to the method of accounting followed by the assessee. The assessee is a
contractor. He maintains his accounts in regard to the contract business. The method
of accounting followed by the assessee for determining the income from business of
contract was rejected by the ITO. The Tribunal, on consideration of the facts and
circumstances of the case, came to a conclusion that the ITO was not justified in
rejecting the method of accounting of the assessee and resorting to proviso to s.
145(1) of the Act.
4. The counsel for the parties are agreed that the same system is being followed
by the assessee ever since the year 1972-73. It is also stated before us that the
similar system followed by the assessee which is followed by the other assessees in
the same line of business is accepted by the Revenue. It is also pointed out to us by
the learned counsel for the assessee that in case of the assessee, the method of
accounting followed by the assessee is being accepted from year to year thereafter
also.
5. We have carefully considered the rival submissions. We find that the
controversy in this case is basically a finding of fact which has to be decided by the
authorities concerned on the facts and circumstances of each case. In the instant
case, the Tribunal has come to a conclusion that the method of accounting followed
by the assessee was correct and resort to s. 145(1) was not called for. We do not
find any infirmity in the said finding. We, therefore, refuse to interfere with the same.
6. In that view of the matter, we answer the question No. 3 in the affirmative
and in favour of the assessee. Having regard to the answer to question No. 3,
question No. 2 need not be answered.
7. No order as to costs.