JUDGMENT
J.S. Verma, Actg. C.J.
1. This is a reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue to decide the following question of law, viz. :–
“Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law, in upholding the order of the Appellate Assistant Commissioner allowing the provision for gratuity at Rs. 1,34,000 as an allowable expenditure under Section 37(1) of the Income-tax Act, 1961 ?”
2. The material facts are these : The assessee carries on the business of manufacture of pipes, etc. For the assessment year 1971-72, for which the period of accounting ended on December 31, 1970, the assessee claimed a deduction of Rs. 1,34,000 on account of provision for gratuity to its employees on the basis of an award of the Industrial Court made on August 5, 1970. This amount was determined and duly certified by an actuary as the amount liable to be paid by the assessee as gratuity as on December 31, 1970, i.e., up to the end of the relevant accounting period The Income-tax Officer had initially allowed the deduction, but later, action was taken under Section 147(b) of the Act as a result of which the deduction was disallowed. The assessee’s appeal to the Appellate Assistant Commissioner succeeded and the deduction was restored. The Revenue’s appeal to the Tribunal has failed and the deduction allowed by the Appellate Assistant Commissioner has been sustained. Aggrieved by the conclusion reached by the Tribunal, the Revenue sought a reference which has been made to answer the above question of law.
3. From the statement of the case, it is clear that the deduction of Rs. 1,34,000 as provision for gratuity was allowed since it was based on the calculation certified by an actuary having been made on the basis of the award of the Industrial Court made on August 5, 1970. This amount was the liability of the assessee for gratuity as on December 31, 1970, on which the accounting period for the relevant assessment year had ended. There is nothing shown to us to indicate that the deduction allowed under Section 37(1) of the Act on these facts, could not have been permitted in accordance with law. The view taken by the Tribunal is, therefore, justified.
4. Consequently, the reference is answered against the Revenue and in favour of the assessee as under ;
“The Tribunal was justified in upholding the order of the Appellate Assistant Commissioner allowing the provision for gratuity at Rs. 1,34,000 as an allowable expenditure.”
5. There shall be no order as to costs.
