Dipak Kumar Sen, J. - (1.) Khandelwal Bros. Pvt. Ltd., the assessee, was assessed to income-tax for the assessment year 1971-72, the corresponding accounting year ending on October 29, 1970. In its return, the assessee sought to provide for a sum of Rs. 80,000 on account of gratuity. The Income-tax Officer disallowed the claim for deduction of the said amount on the ground that it was only a contingent liability. On appeal, the Appellate Assistant Commissioner upheld the decision of the Income-tax Officer.
(2.) On a further appeal by the assessee, the Tribunal accepted the asses-see's contentions and allowed the deduction claimed.
(3.) On an application by the Revenue under Section 256(1) of the Income-tax Act, 1961, the following question stated to be a question of law, has been referred to this court for its opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the sum of Rs. 80,000 representing a provision for gratuity was an allowable deduction in computing the profits and gains of the assessee's business ?";