Y.R.Meena, J. - (1.) On an application under Section 256(2) of the Income-tax Act, 1$61, the Tribunal was directed to refer certain questions and in consequence of the direction, the Tribunal has referred the following questions for our opinion which are set out at pages 1, 2 and 3 of the application : "Question in R. A. No. 580(Cal) of 1995, assessment year 1984-85 : 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee was entitled to deduction of entire premium of Rs. 10,00,000 payable on debenture in the computation of its total income in the year when the debentures are redeemed and not in the year of issue ?
(2.) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not allowing the assessee-company even proportionate deduction on account of premium payable by the company ?
(3.) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that cash subsidy of Rs. 5,72,000 received during the year on generator is deductible from its cost for the purpose of computing depreciation and investment allowance allowable to the asses-see-company during the year ? Questions in R. A. No. 581(Cal) of 1985, assessment year 1985-86 : 1. Whether, oh the facts and in the circumstances of the case, the Tribunal was justified in not allowing the assessee-company even proportionate deduction during the year on account of premium payable on debentures issued by the company during the assessment year 1984-85 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that cash subsidy of Rs. 5,72,000 received in earlier year on generator is deductible from its cost for the purpose of computing depreciation allowable to the assessee-company during the year ? Question in R. A. No. 582(Cal) of 1995, assessment year 1984-85 : 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee was entitled to deduction of entire premium of Rs. 10,00,000 payable on debentures in computing of its total income in the year when the debentures are redeemed and not in the year of issue ?" 2. The assessee had filed a return on March 31, 1984, for the assessment year 1984-85, and thereafter he filed a revised return. Similarly, for the assessment year 1985-86, a return was filed on July 31, 1985, and thereafter a revised return was filed in 1985. In the questions referred, there are mainly two disputes--one is that the cash subsidy of Rs. 5,72,000 received by the assessee should be deducted from the cost of the assets for the purpose of depreciation and investment allowance and the other issue relates to the deduction of Rs. 10,00,000, being premium at the rate of five per cent. payable on redemption of loan convertible secured debentures issued during the year and whether that deduction should be allowed in the first year or last year or that should be spread over seven years. 3. At the outset, learned counsel for the assessee brought to our notice the decision of the apex court in the case of Madras Industrial Investment Corporation Ltd. v. CIT [1997] 225 ITR 802 wherein their Lordships have taken the view that the discount written off should be allowed as deduction proportionately each year over the period for redemption.;