- (1.) These appeals are directed against the decision of the High Court in references made under Section 256 (1) of the Income Tax Act 1961 to answer the following questions : 1. "Whether, on the facts and in the circumstances of the case, the assessee is entitled to the deduction of Rs.52,531/- for the provision made by the assessee for gratuity payable to its employees under the Kerala Industrial Employees' Payment of Gratuity Act, 1970". 2. "Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is justified in taking into consideration for the quantification of the liability for the assessment year 1971-72 under the Kerala Industrial Employees' Payment of Gratuity Act, 1970, the completed years of services of the employees prior to the beginning of the accounting year". 3. "Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that in computing the quantum of the amount to be allowed as a deduction for gratuity payable under the Kerala Industrial Employees' Payment of Gratuity Act, 1970, which law came into force only in the accounting year relevant to the concerned assessment year 1970-71, the assessee is entitled to take into consideration the period of past service of the employees rendered up to the commencement of the relevant accounting year". 4. "Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that in computing the quantum of the amount to be allowed as a deduction for gratuity payable under the Kerala Industrial Employees Payment of Gratuity Act, 1970, which law came into force only in the accounting year 1971-72, the assessee is entitled to take into consideration the period of past service of the employees rendered up to the commencement of the relevant accounting year".
(2.) The High Court answered the above questions in the affirmative in favour of the assessee and against the revenue.
(3.) The High Court placed reliance on the decision of the Kerala High Court in Commr. of Income Tax, Kerala v. Highland Produce Co. Ltd. (1976) 102 ITR 803 which has been affirmed by this Court in Commr. of Income Tax, Madras v. High Land Produce Co. Ltd. (1986) 158 ITR 419 wherein reliance was placed on the decision in Commr. of Income tax, Madras v. Andhra Pradesh Pvt. Ltd. (1986) 158 ITR 416 (SC). It may be mentioned that in taking this view this Court applied the principles laid down in an earlier decision in Shri Sajjan Mills Ltd. v. Commr. of Income Tax, M.P. 156 ITR 585 : (AIR 1986 SC 484).;