Satish Chandra, J. - (1.) THE question of law on which the Tribunal has solicited our opinion is whether the assessee is entitled to claim deduction in respect of contribution made by it to its own gratuity fund, which admittedly was not one of the approved gratuity funds spoken of under Section 36(1)(v) of the Income-tax Act, 1961 ?
(2.) THE Tribunal held that the assessee was entitled to claim deduction. This question is no longer res integra. This court in Madho Mahesh Sugar Mills v. Commissioner of Income-tax [1973] 92 ITR 503 (All) has held that contribution towards gratuity fund was a permissible business expenditure. For the department it was contended that the payment of gratuity is provided for in Clause (v) of Sub-section (1) of Section 36 of the Income-tax Act, 1961, and it can only be allowed in accordance with that provision. This contention was answered by holding that the said case was not covered by Section 36(1)(v) which permits deduction out of the gross profits of any contribution made by an employer towards gratuity fund created under a trust. In the present case the amount is deductible in the computation of the gross profit itself. In other words, the amount was already deductible under Section 28 while computing the gross profits, even if it may not be a permissible deduction under Section 36(1)(v) of the Act. THE same view has been taken by the Bombay High Court in Tata Iron and Steel Company Ltd. v. D.V. Bapat, Income-tax Officer [1975] 101 ITR 292, in which reference has been made to an earlier decision of the Delhi High Court in Delhi Flour Mills Co. Ltd. v. Commissioner of Income-tax [1974] 95 ITR 151. We have heard learned counsel, but we are not disposed to take a different view. In this view, the questions referred to us are answered in favour of the assessee and against the department. The assessee will be entitled to costs which we assess at Rs. 200.;