DIPAK KUMAR SEN, J. ( 1 ) THIS reference arises out of the assessment of the Calcutta Electric Supply Corporation Ltd. , the assessee, in the assessment year 1967-68, the accounting year ending on March 31, 1967. On the applications of both the assessee and the Revenue under Section 256 (1) of the Income-tax Act, 1961, the Tribunal has referred the following questions as questions of law arising out of its order, for the opinion of this court :"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 13,65,116 being the actuarial valuation of the assessee's liability on account of gratuity as on March 31, 1967 in accordance with the Industrial Employment (Standing Orders) Act, 1946, and under the provisions of the Industrial Disputes Act, 1947, payable to its employees constituted an allowable deduction in the computation of the profits and gains of its business for the assessment year 1967-68? 2. Whether, on the facts and in the circumstances of the case, and having regard to the fact that the assessee is a sterling company maintaining accounts in pound sterling, the Tribunal was right in holding that the written down value of the fixed assets should be determined on the basis of the rate of exchange with reference to the date of contract or the date of delivery or the date of payment for the assessment year 1967-68 ? 3. Whether, on the facts and in the circumstances of the case, a revision of the written down value of the assets comprising service lines acquired prior to April 1, 1961, which written down value had been correctly arrived at under the Indian Income-tax Act, 1922, was required for the assessment year 1967-68 by virtue of the definition of 'actual cost introduced by the Income-tax Act, 1961, with effect from the assessment year 1962-63? 4. Whether, on the facts and in the circumstances of the case, the Tribunal was right in upholding the disallowance of the loss of Rs. 51,844 suffered by the company on the remittance of the profits from Calcutta to its head office in the U. K. ? 5. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 51,844 suffered by the company on the remittance of the profits from Calcutta to its head office in the U. K. ? 5. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 15,73,806 being the additional expenses incurred by the assessee due to devaluation of Indian rupee in redeeming its Sterling Debentures constituted an allowable expenditure deductible in the computation of its business income in the assessment year 1967-68 ?" ( 2 ) QUESTION No. 2 which has been referred at the instance of the assessee is covered by a decision of this court in the case of the same assessee in Calcutta Electric Supply Corporation Ltd. v. Addl. CIT [1982] 136 ITR 777. Following the said decision, we answer the said question in the affirmative and in favour of the Revenue. ( 3 ) SIMILARLY, question No. 3 which has also been referred at the instance of the assessee is covered by a decision of this court in Riverside (Bhatpara) Electric Supply Co. Ltd. v. CIT [1977] 109 ITR 399. Following the said decision, we answer this question by stating that the written down value is to be computed in accordance with the provisions of the Act of 1961 even with reference to assets in use in the previous year prior to the April 1, 1961. ( 4 ) THE facts relevant to question No. 4 which has been referred at the instance of the assessee are, inter alia, that the assessee remitted its profits to its head office in the United Kingdom periodically for payment of dividends to the foreign shareholders. Any surplus remaining after such distribution in the United Kingdom was invested. During the relevant previous year, by reason of fluctuations in the rate of exchange, the assessee suffered a loss in the sense that it had to remit an extra amount of Rs. 51,844 for payment of such dividend. The assessee claimed deduction of the said amount from its total income. The Income-tax Officer disallowed the claim. On appeal, the Appellate Assistant Commissioner held that the assessee was not entitled to such deduction inasmuch as the same did not fall within Section 36 of the Income-tax Act, 1961. 51,844 for payment of such dividend. The assessee claimed deduction of the said amount from its total income. The Income-tax Officer disallowed the claim. On appeal, the Appellate Assistant Commissioner held that the assessee was not entitled to such deduction inasmuch as the same did not fall within Section 36 of the Income-tax Act, 1961. The Appellate Assistant Commissioner held further that this was not an expenditure laid out or expended wholly or exclusively for the purpose of business of the assessee under Section 37 of the Act. Following Sutlej Cotton Mills Ltd. v. CIT, the Appellate Assistant Commissioner held that the loss arising out of the change in the rate of exchange in the remittance of the profit was not an allowable business expenditure. The Tribunal upheld the decision of the Appellate Assistant Commissioner. ( 5 ) WE note that the decision of this court in Sutlej Cotton Mills Ltd. [1971] 81 ITR 641 has been partly overruled by the Supreme Court in Sutlej Cotton Mills Ltd. v. CIT [1979] 116 ITR 1. In our view, once dividend was declared, the assessee as a company was bound to pay the same to the shareholders and a liability arose which had to be met by the assessee. As has been held by this court in CIT v. Tingri Tea Company Ltd. [1971] 79 ITR 294, where money was borrowed in India on an overdraft account and deposited in the United Kingdom banks for the purpose of payment of dividends to the non-resident shareholders, the said transaction was for the purpose of business of the assessee. In that view, the extra amount which had to be paid by the assessee in the instant case for the purpose of remittance of dividends must be held to be for a similar purpose, viz. , for the business of the assessee and to that extent there is no reason why the same should not be considered to be a legitimate business expenditure of the assessee and deductible. ( 6 ) ACCORDINGLY, we answer question No. 4 in the negative and in favour of the assessee. ( 7 ) WE now take up for consideration questions Nos. 1 and 5, both of which have been referred at the instance of the Revenue. ( 6 ) ACCORDINGLY, we answer question No. 4 in the negative and in favour of the assessee. ( 7 ) WE now take up for consideration questions Nos. 1 and 5, both of which have been referred at the instance of the Revenue. ( 8 ) ON question No. 1, learned advocate for the assessee submitted that the controversy raised in the question was covered by a decision of this court in CIT v. Eastern Spinning Mills Ltd. [1980] 126 ITR 686 and should be answered in favour of the assessee. Learned advocate for the assessee also relied on a decision in the case of CIT v. Andhra Prabha (P)Ltd. , where the same view was taken. ( 9 ) LEARNED advocate for the Revenue contended on the other hand that the decisions cited on behalf of the assessee were distinguishable on the facts of the case, inasmuch as in the instant case, the assessee had not made any provision for payment of the said liability on account of gratuity. In support of his contention, the learned advocate for the Revenue cited Shree Sajjan Mills Ltd. v. CIT [1985] 156 ITR 585. In this case, the Supreme Court reiterated the principles laid down in Metal Box Co. of India Ltd. v. Their Workmen [1969] 73 ITR 53 and noted that the assessee could claim deduction of an estimated liability under a gratuity scheme, if it chose to provide for the same in its profit and loss account. The Supreme Court further analysed the decisions as prevailing before Section 40a (7) was inserted in the Income-tax Act, 1961, in 1973 and laid down that a provision made for payment of gratuity, which would become due and payable in the previous year, would be allowable as an expenditure of the previous year on accrual basis, when the mercantile system of accounting was followed by the assessee. ( 10 ) LEARNED advocate for the assessee contended in reply that in the instant case, it has been found as a fact that the liability had accrued in the previous year under the Industrial Employment (Standing Orders) Act, 1946, and also under an award passed by the Industrial Tribunal under the Industrial Disputes Act, 1947, which provided for payment of gratuity to its employees. The amount of such gratuity payable could be ascertained actuarially. The amount of such gratuity payable could be ascertained actuarially. He submitted that when the liability admittedly accrued, it was immaterial whether any provision had been made in the accounts for the payment of the same and the assessee could always claim deduction of the same. In support of his contention, the learned advocate for the assessee cited Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363, where the Supreme Court observed as follows (at page 367) :"we are wholly unable to appreciate the suggestion that if an assessee under some misapprehension or mistake fails to make an entry in the books of account and although, under the law, deduction must be allowed by the Income-tax Officer, the assessee will lose the right of claiming or will be debarred from being allowed that deduction. Whether the assessee is entitled to a particular deduction or not will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights nor can the existence or absence of entries in the books of account be decisive or conclusive in the matter. " ( 11 ) THE learned advocate for the assessee also cited another decision of this court in CIT v. Shyamnagar Tin Factory (P.) Ltd. [1984] 150 ITR 617, where it was held that where statutory liability of the assessee arose under the West Bengal Employees' Payment of Compulsory Gratuity Act, 1971, which had come into force for the first time in the relevant accounting period, although the assessee had not made any provision for the liability, it was entitled to a deduction. Following the decision in the case of Kedarnath Jute Mfg. Co. Ltd. , it was held that whether the assessee was entitled to a particular deduction or not will depend on the law applicable and not on the view which the assessee might take of its rights. The existence or absence of entries in the books of account will be neither decisive nor conclusive. ( 12 ) IT appears to us that in the instant case, the Tribunal has found as a fact that the statutory liability for payment of gratuity by the assessee had arisen in the relevant previous year. The said liability had been actuarially valued and it represented a revenue expenditure. These facts are not disputed by the Revenue. ( 12 ) IT appears to us that in the instant case, the Tribunal has found as a fact that the statutory liability for payment of gratuity by the assessee had arisen in the relevant previous year. The said liability had been actuarially valued and it represented a revenue expenditure. These facts are not disputed by the Revenue. Absence of a provision for meeting the said liability in the books of the assessee, in our view, cannot make any difference as to the allowability of such liability. It is not disputed that the assessee follows the mercantile system of accounting and that there has been an accrual of the said liability in the relevant accounting year. Following Shyamnagar Tin Factory (P.) Ltd. , we answer question No. 1 in the affirmative and in favour of the assessee. ( 13 ) THE controversy raised in question No. 5, in our view, is covered by a decision of a Division Bench of this court in the case of Bestobell (India) Ltd. v. CIT [1979] 117 ITR 789. The facts in that case are more or less identical to the facts before us. In that case, as a result of devaluation, the assessee had to incur an extra expenditure to repay a loan. It was held that the extra expenditure was not incurred for the purpose of securing the loan and that the same was inextricably connected with the assessee's indebtedness. It was held further that the said extra expenditure was not an expenditure of a revenue nature but was of a capital nature. ( 14 ) LEARNED advocate for the assessee however contended that the controversy raised in the question was covered by another decision of this court in Oil India Co. Ltd. v. CIT [1982] 137 ITR 156. In that case, the assessee had obtained loans in sterling in England for the purpose of meeting its revenue expenditure directly related to its business. The assessee maintained its accounts on mercantile basis. In the accounting year involved, due to the devaluation of the Indian rupee, the assessee incurred a liability to pay an extra amount and claimed the same as a business expenditure. It was not disputed that the additional liability was in the nature of revenue. The assessee maintained its accounts on mercantile basis. In the accounting year involved, due to the devaluation of the Indian rupee, the assessee incurred a liability to pay an extra amount and claimed the same as a business expenditure. It was not disputed that the additional liability was in the nature of revenue. On the facts, it was field that the assessee having borrowed the money was temporarily the owner of the fund and if the assessee had to incur an additional liability in respect of the same, the same would be a loss in connection with or arising out of its business. It was held that such loss was deductible as a business loss. ( 15 ) IN the facts of the instant case, the money borrowed on debentures has been found to be utilised by the assessee not for the business of the company but for financing a capital expenditure programme of the assessee in India. ( 16 ) THE facts of this case, it appears, are similar and conform more to the facts of Bestobell (India] Ltd. rather than to the facts in Oil India Co. Ltd. The decision in Oil India Co. Ltd. 's case, in our view, did not in any event take a different view of law from that in Bestobell (India) Ltd. 's case and, on the other hand, applied the earlier decision in part. For the reasons as aforesaid, we answer question No. 5 in the negative and in favour of the Revenue. ( 17 ) AT the conclusion of the judgment, learned advocate for the assessee prayed for a certificate to the effect that issues arising from questions Nos. 2, 3 and 5 were substantial questions of law and a certificate should be given that the same were fit for appeal to the Supreme Court. It was submitted that such certificate had already been granted by this court in the cases of Riverside (Bhatpara) Electric Supply Co. Ltd. [1977] 109 ITR 399, CIT v. Martin and Harris P. Ltd. [1985] 154 ITR 460 and in Calcutta Electric Supply Corporation Ltd. v. Addl. CIT [1982] 136 ITR 777. ( 18 ) THE prayer of the assessee is allowed. Let a certificate be issued in respect of questions Nos. 2, 3 and 5 as prayed for. Let the order for issue of the certificates be drawn up separately. CIT [1982] 136 ITR 777. ( 18 ) THE prayer of the assessee is allowed. Let a certificate be issued in respect of questions Nos. 2, 3 and 5 as prayed for. Let the order for issue of the certificates be drawn up separately. In the facts and circumstances, there will be no order as to costs.