Judgment :- Paripoornan, J. At the instance of the Revenue, the Tribunal, Cochin Bench has referred the following questions of law for the decision of this Court: "1. Whether, on the facts and in the circumstances of the case, and also in the light of the principle laid down in United Mercantile Co. v. CIT (1966 KLT 1019 = (1967) 64 ITR 218 (Ker.) the Tribunal is right in law and fact in holding, (i) it cannot be said that there was any information which would justify the reopening of the assessment; (ii) it appears to be only a change of opinion on the part of the ITO; (iii) no income had escaped assessment and for this reason also the reopening of the assessment cannot be sustained; (iv) the reopening of the assessment is not legally sustainable? 2. 'Whether, on the facts and in the circumstances of the case, the assessee is entitled to claim deduction for gratuity at the rate of 8-1/3% of the salary"? 2. The respondent/ assessee is a public limited company. We are concerned with the asst. yr. 1975-76. The assessee published a Malayalam daily and also periodicals. For the relevant assessment year, for which accounting period ended on 31st Dec. 1974, the assessee claimed a deduction of Rs. 3,39,873 being the actuarial valuation of the liability for payment of gratuity. In the original assessment, an amount of Rs. 93,024 was disallowed and the balance of Rs.2,46,849 was allowed as deduction. The disallowance of Rs. 93,024 was affirmed by the AAC and by the Tribunal. The, order of the Tribunal is dt.13th July, 1978. In the meanwhile, the Revenue audit pointed out, by a note dt.12th Aug. 1977, that the contribution to a recognised gratuity fund is regulated by R.103 of the IT Rules and so the allowance already made in the sum of Rs. 2,46,849 requires further appraisal. Thereafter the ITO found that the assessee was required to make only a contribution of 5% of the salary paid to the employees covered by the fund and on that basis only a sum of Rs. 1,66,930 could have been allowed as deduction. The deduction allowed was in excess of Rs. 79,919. The ITO reopened the assessment on 281h March, 1980 and made an addition of Rs. 1,66,930 could have been allowed as deduction. The deduction allowed was in excess of Rs. 79,919. The ITO reopened the assessment on 281h March, 1980 and made an addition of Rs. 79,919.In appeal, the CIT (A) held that the reopening of the assessment was uncalled for in view of the decision of the Tribunal dt.13th July,1988, and that this was only a case where the audit took a different view of the matter and no "information" is involved to justify the reopening of the assessment. He also opined that the matter is governed by S.40A(7) of the IT Act and deduction was allowable. The order of the CIT (A) is dt.Sth Oct. 1982 (Annexure-B). In further appeal by the Revenue, the Tribunal held that the gratuity trust was created in the year 1969and the application for approval of the gratuity fund was filed before the (TO on 15th Dec. 1969. The instrument of trust and copy of the rules were also filed before the ITO along with a covering letter dt.11th March, 1970, and a copy of the application for sanction of initial contribution of 8.5% was filed before the CIT (A) on 5th Nov. 1973.On the basis of the above facts, the Tribunal found that the matter regarding the contribution to the approved gratuity fund was being considered by the ITO every year since 1970-71, that the ITO had all the relevant materials (including the trust deed) before him when he made the original assessment for this year (1975-76) and that for reopening the assessment it was only a case of change of opinion, on the part of the ITO. on the basis of what was pointed out by the Revenue audit, namely, that the deduction on account of gratuity liability should be confined to an amount worked out at 5% of the salary as per the gratuity trust deed. The Tribunal held that there was no information to justify the reopening of the assessment. 3. On the merits, the Tribunal held that before the introduction of S.40A(7) of the Act, 1975 by Finance Act 1975 (Act 25/75) with retrospective effect from 1st April, 1973, S.36(I)(v) of the I.T.Act along with R.103 of the I.T. Rules applied and after the introduction of S.40A, the deduction should be worked out on the basis of S.40A(7). 3. On the merits, the Tribunal held that before the introduction of S.40A(7) of the Act, 1975 by Finance Act 1975 (Act 25/75) with retrospective effect from 1st April, 1973, S.36(I)(v) of the I.T.Act along with R.103 of the I.T. Rules applied and after the introduction of S.40A, the deduction should be worked out on the basis of S.40A(7). Under the said provision, the admissible amount as defined in Expln.l is up to 8-1/3% and S.36(1)(v) and R.103 will not apply. In this view, the deduction allowed in the original assessment was held to be correct and concluded that no income has escaped assessment and the reopening was not valid. Accordingly. the appeal filed by the Revenue was dismissed. It is thereafter, at the instance of the Revenue, the questions of law, as stated hereinabove, have been referred for the decision of this Court. 4. We heard counsel for the Revenue, Mr.P.K.R. Menon, as also counsel for the respondent/ assessee. 5. Both sides placed reliance on the observation of the Supreme Court in Indian & Eastern Newspaper Society v. 677(1979) 119 itr 996 (SC). In particular, counsel for the Revenue placed reliance on the Bench decision of this Court in United Mercantile Co. Ltd. v.CIT, 1966 KLT 1019 = 64 ITR 218 (Ker.) and the decision of the Supreme Court in Anandji Haridas & Co. v S.P. Kasture AIR 1968 SC 565. Counsel for the respondent/ assessee submitted that the Tribunal was justified in its view, that this was a case of a mere change of opinion on the basis of the audit report and so the reopening of the assessment was invalid in view of the decision of the Supreme Court in Indian & Eastern Newspapers Society case (supra). Counsel for the assessee also contended that even on the merits the Tribunal was justified in holding that R.103 read along with S.36(1)(v) of the Act has no application after the introduction of S.40A(7). According to S.40A(7) read along with the Explanation, the deduction allowed is justified and proper. 6. On hearing the rival pleas, we arc of the view that the plea of the assessee should succeed. In its appellate order dt. 31stDec.1984, the Tribunal has dealt with the matter in paras. 4.4 and 5.4 rather elaborately. According to S.40A(7) read along with the Explanation, the deduction allowed is justified and proper. 6. On hearing the rival pleas, we arc of the view that the plea of the assessee should succeed. In its appellate order dt. 31stDec.1984, the Tribunal has dealt with the matter in paras. 4.4 and 5.4 rather elaborately. The Tribunal has observed thus, in para.4.4: "In the objections filed by the assessee on 26th March, 1980 to the draft assessment order issued in connection with the reassessment, the assessee stated that the gratuity trust was constituted in the year 1969, that application for approval was filed before the ITO on 15th Dec. 1969, that the copy of the instrument of the trust and copy of the rules were also filed along with the application, that these have been acknowledged on 17th Dec. 1969 and that the original deed was filed before the ITO with the covering letter dt 11 th March, 1970, which was acknowledged on 16th March, 1970. It is also staled in the letter that the copy of the application for sanction of initial contribution at 8.5% made before the CIT on 5th Nov., 1973 was also filed before the ITO and that the contribution to the approved gratuity fund was being considered by the ITO year after the year from 1970-71. These facts are not disputed by the Department". 7. In the light of the above facts, it is clear that the entire materials were before the ITO when he made the original assessment. It is really a case where the contribution to the approved gratuity fund was being considered by the ITO year after year since 1970-71 and the1TO had before him the relevant copy of the trust deed, copy of the rules and also copy of the application for sanction of initial contribution at 8.5% when he passed the order for this year (1975-76). From the year 1970-71, the matter was being considered and allowed. The ITO had all such relevant materials before him when he made the original assessment and held that the assessee was entitled to deduction not exceeding 8.5%. It was only the audit which altered the ITO that the gratuity liability should be confined to an amount worked out at 5 % of the salary, since it is regulated by R.103 of the I.T. rules. 8. It was only the audit which altered the ITO that the gratuity liability should be confined to an amount worked out at 5 % of the salary, since it is regulated by R.103 of the I.T. rules. 8. In the light of the facts admitted by the Department (Revenue) not disputed -it is evident that all the relevant materials were before the ITO when he made the original assessment. He merely changed the opinion solely on the basis of the audit report. The Tribunal was justified in holding that there was no information which will justify the reopening of the assessment. The order of the Tribunal does not disclose any error of law. We are of the view that, the decisions relied on by the Revenue have no application on the facts of this case. We hold so. This is case of "mere change opinion" on the same materials and so the officer was incompetent to reopen the assessment (Sec Indian & Eastern Newspaper Society v. CIT (supra). 9. Even on the merits, the applicability of R.103 will arise only when deduction had to be allowed in conformity with S.36(i)(iv) of the IT Act. After the introduction of S.40A of the Act R.103 of the I.T. Rules will have no application. The claim for deduction has to be worked out solely under S.40A(7) of the Act which came into effect from 1st April, 1973, by the retrospective effect given to Act 25 of 1975. The Tribunal held so in para.5.4 of the order. The Department has no case that the assessee has not satisfied conditions 1 to 3 as envisaged by sub-cl. (ii) of cl. (b) of sub-s.(7) of S.40A. The only question is that what is the admissible amount as defined in Expln.l and the Tribunal held that it will be an amount which does not exceed an amount calculated at the rate of 8-1/3% of the salary of each employee. In this perspective, the Tribunal held that it will be incorrect to reduce the quantum of the admissible amount as defined in Expln.1 by resorting to R.103. The said Explanation does not make any reference to the limitation imposed by R.103. We are of the/view that the Tribunal was justified in holding so. So even on the merits, the plea of the assessee was well founded, as held by the Tribunal. 10. The said Explanation does not make any reference to the limitation imposed by R.103. We are of the/view that the Tribunal was justified in holding so. So even on the merits, the plea of the assessee was well founded, as held by the Tribunal. 10. We, therefore, answer question No.1 in the affirmative, against the Revenue and in favour of the assessee. We answer question No .2 in the affirmative, in favour of the assessee and against the Revenue.