JUDGMENT

BHARUCHA, J. - These are references by the Income Tax Appellate Tribunal to this Court under Section 257 of the Income Tax Act, 1961. The references have been made because of a divergence of opinion between several High Courts.

2. The assessment year in question in Tax Reference Case No. 13 of 1981 is 1973-74; in Tax Reference Cases Nos. 14 and 15 of 1981 they are 1972-73 and 1973-74; and in Tax Reference Case No. 16 of 1981 it is 1972-73.

3. Each of the assessees is a company engaged in the business of generation of electricity and distribution thereof to consumers. It is governed by the Electricity (Supply) Act, 1948.

4. For the sake of convenience the facts in Tax Reference Case No. 13 of 1981 are set out. By reason of the provisions of the Electricity (Supply) Act and of the Sixth Schedule thereto, the assessee appropriated the sum of Rs 46,460 out of its revenues to a Contingency Reserve Account during the previous year relevant to the Assessment Year 1973-74. This amount was claimed by the assessee as a deduction in the computation of its total income for the purposes of income tax. The ITO rejected the claim. The Appellate Assistant Commissioner allowed the assessee