S.C. Sen, J.
1. Two questions of law have been referred to by the Tribunal under Section 256(1) of the Income-tax Act, 1961 (' the Act '):
' 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was entitled to relief under Section 84 of the Income-tax Act, 1961, in respect of the assessment years 1963-64, 1965-66, 1966-67 and 1967-68?
2. Whether the Tribunal was right in holding that the sum of Rs. 3,58,000 could be regarded as revenue expenditure to be deducted in computing the income, profits and gains of the assessee during the accounting year relevant to the assessment year 1966-67 '
2. So far as the first question is concerned, the facts are not in dispute. The assessee claimed relief under Section 84 in respect of glass bulb blowing unit, gaseous lamp unit and miniature prefocus lamp. The Income-tax Officer rejected the claim of the assessee for the first year under reference by a short order stating that the glass bulb blowing unit, gaseous lamp unit and miniature prefocus lamp unit were in fact extensions of the existing industrial undertakings involving the installation of a few machineries and could not be called ' newly established industrial under-takings ' within the meaning of Section 84 in respect of glass bulb blowing unit, gaseous lamp unit and miniature prefocus lamp unit.
3. We are concerned in this reference with the assessment years 1963-64, 1965-66, 1966-67 and 1967-68 for which the relevant previous years ended on June 30, 1962, June 30, 1964, June 30, 1965, and June 30, 1966, respectively. It is of interest to note that in the assessment for the assessment year 1963-64, the Income-tax Officer after local inspection allowed the claim of the asseseee under Section 84, The Income-tax Officer who passed the assessment orders for the subsequent years differed from the view taken by his predecessor-in-office.
4. The matter ultimately went to the Tribunal. The Tribunal held that the new units were 'newly established industrial undertakings' within the meaning of Section 84 and as such were entitled to the relief claimed. The Tribunal referred to a circular issued by the Central Board of Revenue under Section 15C of the Indian Income-tax Act, 1922, which corresponds to Section 84 of the Income-tax Act, 1961, in which it has clarified, inter alia:
' In order to be entitled to the concession, it is not necessary that a separate company should be formed to operate the new undertaking. At the same time, it is very difficult to give in general terms a precise and exhaustive definition which could apply to all cases and in all conceivable circumstances. The question is largely one of degree and will have to be decided after consideration of the facts of each particular case.'
5. The Tribunal had held that having regard to the size of the business of the assessee, there has been a substantial increase in its total output. The Tribunal has noted that the paid-up capital of the company was increased to Rs. 35 lakhs from Rs. 10 lakhs. A large number of facts were also taken into account by the Tribunal:
(a) The Government of India, in the Ministry of Commerce and Industry, have granted special licences to establish these new undertakings ;
(b) The Government of India, in the Chief Controller of Imports and Exports, have granted capital goods licences for importing new machineries for these new undertakings ;
(c) the complete machinery for these projects were all imported ; local expenses were duty and installation ;
(d) the Government of India had approved separate technical service charges agreements for these new undertakings payable to the technical collaborators;
(e) remittances for technical service charges for these new undertakings were approved by the Reserve Bank of India ;
(f) the units were located in distinct and separate areas in the lamp factory building ;
(g) each of these new undertakings was worked with power and with more than ten persons ;
(h) the workers and management of the units were separate and distinct from one another ;
(i) separate records of stock, goods consumption, production and sales, wages and salaries and plant and machinery were maintained;
(j) technical service charges had been computed on such pro form as, profit and loss accounts (cost of production) and remittances had been approved by the Reserve Bank of India ;
(k) the then Income-tax Officer inspected the factory (relating to the assessment year 1962-63) and after duly satisfying himself allowed the claim for relief under Section 84 for miniature prefocus lamp being a new undertaking for that year.
6. It cannot be said that these factors are irrelevant or extraneous for the purpose of the question before the Tribunal. There cannot be any question of perversity and in fact no such question has been raised. There is no legal infirmity in the order of the Tribunal. In our opinion, having regard to the facts and circumstances of the case, the Tribunal's order must be upheld on the first question.
7. The second question does not pose any difficulty. After the statutory liability to pay bonus arose, the assessee-company made a provision in its accounts for payment of bonus. The existence of the liability is not disputed. If an amount is set apart for discharge of the liability on actuarial valuation, that, has to be allowed as deduction. The principles of law are well settled.
8. In view of the aforesaid, the second question will be answered in favour of the assessee.
9. On the facts and in the circumstances of the case, therefore, both the questions will be answered in the affirmative and in favour of the assessee. There will be no order as to costs.
Satish Chandra, C.J.
10. I agree.