Ajit K.Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment years 1978-79 and 1979-80, the following questions of law have been referred to this Court : Questions in R. A. No. 1112(Cal) of 1986 : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in sustaining the order of the Commissioner of Income-tax (Appeals) allowing the assessee's claim for compensation of Rs. 1,18,578 paid to the employees for early retirement treating the same as a revenue expenditure ? 2.Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in sustaining the order of the Commissioner of Income-tax (Appeals) allowing the assessee's claim for deduction of Rs. 75,000 in respect of incentive wages paid to the employees for better performance on account of early retirement benefits ? 3. Whether, on the facts and in the circumstances of the case, and on a correct interpretation of the provisions of Section 32A of the Income-tax Act, 1961, the Tribunal was justified, in law in sustaining the order of the Commissioner of Income-tax (Appeals) allowing the assessee's claim for investment allowance in respect of assets like electrification, fire extinguishers and time-office equipments ? "
(2.) Question in R. A. No. 1113(Cat) of 1986 : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in sustaining the order of the Commissioner of Income-tax (Appeals) allowing the assessee's claim for compensation of Rs. 3,49,842 paid to the employees for early retirement treating the same as a revenue expenditure ? "
(3.) The facts relating to this reference are that, for the assessment years 1978-79 and 1979-80, the Income-tax Officer disallowed the assessee's claim of Rs. 1,18,578 and Rs. 3,49,842, respectively, being the amount paid to the employees for early retirement on the ground that the payment was not a liability of the assessee and that the same was in the nature of ex gratia payment.;