( 1 ) IN this reference under Section 256 (1) of the I. T. Act, 1961, the following question has been referred to this court:"whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the provision for gratuity amounting to Rs. 8,87,863 was allowable in its entirety as a revenue deduction for the assessment year 1972-73 ?"

( 2 ) AS is apparent from the question, the assessment year involved is the assessment year 1972-73. The ITO had noticed that the assessee had created a provision for gratuity to the extent of Rs. 8,57,863. The ITO was of the opinion that the allowable amount pertaining to the year of account was only Rs. 1,79,595. In that view of the matter he disallowed the sum of Rs. 6,78,267. He held that the amount represented excess provision. The assessee preferred an appeal before the AAC.

( 3 ) IT was argued before the AAC that the entire provision of Rs. 8,57,8. 63 was made on actuarial basis and was in consonance with the statutory provisions of the West Bengal Employees' Payment of Compulsory Gratuity Act, 1971 (hereinafter referred to as "the said Act" ). It was submitted that in view of th