Judgment :- SRINIVASAN J. The Tirunelveli Motor Bus Service, a private Company, is the assessee. For the assessment year 1950-51 the return of income was for Rs. 14, 555. For failure of the assessee to comply with the requirement of the notice under section 22(4) and section 23(2) of the Act, an assessment was made under section 23(4). The best of judgment assessment of the net income was Rs. 1, 80, 000, which was later reduced on appeal to Rs. 1, 30, 000. In that year, the assessee had debited its accounts with the sum of Rs. 71, 949 in respect of its liability to pay bonus for its employees. The debit did not represent any actual payment. In the account year relevant to the assessment year 1957-58, the claim of the employees to bonus for the account year relevant to the assessment year 1950-51 was settled at Rs. 17, 470, and that was paid to the employees. The difference between the original debit and the actual payment, i.e., Rs. 54, 479 was credited to the profit and loss account of the company In the assessment for the year 1957-58, the Income-tax Officer brought this amount to tax. He purported to do so under section 10(2A) of the Act. He repelled the contention of the assessee that since the original assessment for the year 1950-51 was made under section 23(4), there was no call for the department to examine the allowability of any item of expense such as the one under consideration. He thought that the estimate of the net income impliedly meant that the allowances which the assessee was entitled to had been given. On appeal, the Appellate Assistant Commissioner accepted this view as correct. Though he observed that there was nothing on record to show that the Income-tax Officer specifically dealt with this particular allowance, an inference to that effect could be reasonably made from the circumstances. On further appeal to the Tribunal, however, the Tribunal took a different view. The Tribunal felt that since it was an estimate that was made, the book position must have been disregarded. It stated "unless the department is able to identify any particular item of expense as having been already allowed as deduction in an earlier assessment conclusively, section 10(2A) is not available for recoupment" * . The Tribunal felt that since it was an estimate that was made, the book position must have been disregarded. It stated "unless the department is able to identify any particular item of expense as having been already allowed as deduction in an earlier assessment conclusively, section 10(2A) is not available for recoupment" * . It accordingly upheld the assessee's contentionOn the application of the Commissioner of Income-tax, the Tribunal has referred the following question for the determination of this court "Whether on the facts and in the circumstances of the case, the sum of Rs. 54, 479 is assessable in the year 1957-58 under the provisions of section 10(2A) of the Income-tax Act of 1922 ?" * The above provision, section 10(2A), provides that where for the purpose of computing profits or gains, an allowance or a deduction has been made in the assessment for any year in respect of any expenditure or trading liability incurred by the assessee, and subsequently during any previous year the assessee has obtained some benefit in respect of such trading liability by way of remission or cessation thereof, the amount received by him or the value of the benefit accruing to him shall be deemed to be profits or gains of the business during that previous year. The section is perfectly clear. Applying it to the facts of this case, what it means is that if the assessee had incurred a particular liability, such as for bonus, of the sum stated earlier in the account year relating to 1950-51 and thereafter in any subsequent year that particular trading liability had become less, as in the present case which had been brought down to Rs. 17, 470, since the assessee had obtained the benefit of a deduction of a larger amount in the earlier year, he shall be deemed to have made a profit to the extent of the difference between the original liability and the reduced liability in the subsequent year. It is the case of the department that notwithstanding that no allowance or deduction was purported to have been made in the earlier year, as the computation of the income was only on an estimate, it must be held that since the estimate was of the net income, all deductions which the assessee would be entitled to in respect of his trading liability should be deemed to have been granted. If that is so, the section clearly permits the assessment to tax of the difference. Reference has been made by the learned counsel for the department to Government Mail Motor Service v. Commissioner of Income-tax. That was also a case where for five successive years assessments had been made under section 23(4) of the Act on the best of judgment case. For the next year a similar assessment was again made and there were also further proceedings under section 34 of the Act. In those proceedings, the assessee claimed depreciation on certain motor cars and lorries. A partial allowance was made, but with regard to the rest, the Income-tax Officer held that those vehicles had been in use in 1922, and that since the assessment relevant to that year was made under section 23(4), that assessment had become final and was not capable of being reopened. The matter came before the High Court and the learned judges observe thus "Once an assessment has been made to the best of the Income-tax Officer's judgment on a net income under section 23(4) of the Act, it follows that all expenses incidental to the business must be presumed to have been taken into consideration in arriving at the net income assessed." * It is this passage in the judgment that has been relied upon by the learned counsel for the department. Though this observation lends some support to the argument, we may notice that in that particular case, it was a case of a depreciation of the working assets which, was not available beyond five years, and when the claim was put forward it was in relation to the assessment beyond the period of five years. The final passage in the judgment refers to the fact that the claim was admissible only during that period of five years and not thereafter Mr. S. Swaminathan, learned counsel for the assessee argues, firstly, that no deduction was in fact made in the assessment year 1950-51, for what was made was only a best of judgment assessment which had no regard whatsoever to any allowance or deduction under section 10(2) of the Act. He next contends that the debit of Rs. 71, 000 and odd made in the accounts relevant to that year was only a provision and not a trading liability. He next contends that the debit of Rs. 71, 000 and odd made in the accounts relevant to that year was only a provision and not a trading liability. He argues that since there was no legal liability upon the assessee to pay that amount so provided in the account, it could not have been said to have been incurred by the assessee in that year. It was only a notional figure put into the accounts to indicate a possible liability. According to the learned counsel, the ascertainment of that liability in 1957-58 at a lesser figure would not, therefore, mean that there had been a remission or cessation of a trading liability to the extent of the difference enabling the department to invoke section 10(2A)This argument fails to take note of certain important features. Forgetting for the moment that the assessment was made on a best of judgment basis by the Income-tax Officer, the admitted facts are that the assessee maintains its accounts on the mercantitle system. It is entitled to debit against the profits made in any year the liability which has accrued, even though that liability may not have been discharged. Mr. Swaminathan's further argument that there was no award or agreement under the Industrial Disputes Act, which would have created a legal liability upon it is no doubt good as far as it stands. But it is well-known that such bonus is payable year after year in the interests of industrial peace and in fact even in the assessment year 1949-50, similar bonus to a large sum had been paid to the employees. In that assessment year 1949-50, there appears to have been a regular assessment on the basis of which the subsequent estimated assessments were made. That the bonus claim in 1949-50, debited probably in an identical manner as in 1950-51, was allowed in that year does not appear to be disputed. That must have been only on the basis that there was a legal liability upon the assessee to meet that claim. We are, therefore, unable to agree with Mr. Swaminathan, learned counsel for the assessee, that there was no legal liability to pay the sum of Rs. That must have been only on the basis that there was a legal liability upon the assessee to meet that claim. We are, therefore, unable to agree with Mr. Swaminathan, learned counsel for the assessee, that there was no legal liability to pay the sum of Rs. 71, 949 in the account year relevant to the assessment year 950-51 and that the provision in the account cannot, therefore, be taken as amounting to a deduction having been claimed or granted We are satisfied also that the fact that it was a best of judgment assessment of the net income that was made must have its logical consequences. If the expression "net income" means anything at all, it means that as against the gross income, the several allowances to which the assessee is entitled under the Act had been given credit to and the balance had been reached. Mr. Swaminathan however urges that in the assessment for the assessment year 1950-51, the Income-tax Officer while estimating the net income at Rs. 1, 80, 000 said in particular that "depreciation admissible is deemed to have been allowed". He argues that except for depreciation allowance, no other deduction was in the contemplation of the Income-tax officer. We are unable to give this passage the interpretation contended for. Depreciation allowance stands on a different footing, as it is capable of being carried forward from year to year for a certain number of years and becomes exhausted after a period of time. The particular reference to depreciation cannot minimise the weight of the inference that can be drawn from the fact that it was an estimate of the net income which clearly means that all allowances which the assessee was entitled to had been inferentially taken into accountWe are accordingly of the view that the conclusion reached by the Income-tax Appellate Tribunal is erroneous. The question has, therefore, to be answered in the affirmative and in favour of the department. The department will be entitled to its costs. Counsel's fee Rs. 250 Question answered in the affirmative.