Y.R.Meena, J. - (1.) On a reference application, the Tribunal has referred the following question for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the sum of Rs. 13,35,467 is allowable under Section 40A(7)(b)(i) of the Income-tax Act, 1961 ?" The assessee is carrying on business of production and sale of electricity. On July 17, 1975, the electricity undertaking was taken over by the Bihar State Electricity Board and all assets, liabilities etc., vested in the said Board under the Bihar Electricity Supply Undertakings (Acquisition) Act, 1979. The compensation money receivable by the assessee-company for such acquisition was not finalised on the date of making assessment. The assessee had claimed the gratuity payable as on July 17, 1975, at Rs. 13,35.467 excluding a sum of Rs. 1,17,418 which was allowed in the assessment for 1974-75. The Assessing Officer disallowed the claim of the assessee on the ground that there is a provision for payment of gratuity to the employees of the assessee on their retirement or on termination of their employment. The employees of the assessee neither retired nor their services are terminated nor the gratuity amount has been paid directly by the assessee to its employees ; under the Bihar Electricity Supply Undertaking (Acquisition) Act, 1979, there was a clause in the Act of 1979 that, adjustment of gratuity liability of the employees shall be made from the gross amount of compensation payable by the State. Therefore, the claim of the assessee for deduction of the amount of gratuity liability was rejected by the Income-tax Officer. The Commissioner of Income-tax (Appeals) has confirmed the view taken by the Assessing Officer.
(2.) In appeal before the Tribunal, the Tribunal in following the decision of the Madras High Court in the case of CIT v. Sarada Binding Works [1985] 152 ITR 520, allowed the claim of the assessee.
(3.) Learned counsel for the assessee submits that now the decision of the Madras High Court has been approved by the apex court. No contrary decision is brought to our notice by learned counsel for the Revenue.;