JUDGMENT

B.P. Jeevan Reddy, J.-This appeal is preferred on the basis or a certificate of fitness granted by the Calcutta High Court under Section 261 of the Income-tax Act. Two questions were referred for the opinion of the High Court under Section 256(1) of the Income Tax Act. They are :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is not a local authority as contemplated by Section 2(31)(vi) of the Income-tax Act, 1961 ?

(2) Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that the assessee is not entitled to an allowance for its contribution to the employees provident fund gratuity funds?"

2. The High Court answered both the questions in the affirmative-i.e., against the assessee and in favour of the Revenue. In this appeal however, Sri Tapas Ray, argued only one question, viz., Question No. 1.

3. The assessee, Calcutta State Transport Corporation, is a statutory corporation established under the Road Transport Corporations Act, 1959. It was constituted under a notification dated June 10, 1960. Prior to the constitution of the assessee, Road Transport was managed by