BARIN GHOSH, J. ( 1 ) THE present appeal is against an order dated February 27, 1976, passed by the learned judge whereby the rule issued in terms of prayers (a) and (b) of the writ petition was made absolute and the respondents were directed to make fresh assessment in accordance with law for the assessment year 1972-73 ignoring Circular No. 146 (see [1975] 101 ITR (St.) 46), dated September 26, 1974, In prayer (a) of the writ petition the writ petitioner had sought for a writ of certiorari seeking quashing of Circular No. 146 (F No. 228/2/73-IT (A. II) (see [1975] 101 ITR (St.) 46) dated September 26, 1974, issued by the Central Board of Direct Taxes and assessment order if any made by the assessment officer on the basis of the said circular for the assessment year 1972-73 or any subsequent assessments and in prayer (b) of the writ petition the writ petitioner had sought for a writ of prohibition for a direction upon the respondents commanding them to forbear from giving effect to and/or taking any steps in pursuance of the aforesaid Circular No. 146 (see [1975] 101 ITR (St.) 46), dated September 26, 1974, for the assessment year 1972-73 or any subsequent assessments. ( 2 ) THE learned judge passed the order under appeal on the basis of the judgment of the Bombay High Court in the case of Tata Iron and Steel Co. Ltd. v. D. V. Bapat, ITO [1975] 101 ITR 292. In that case, although the same circular was under challenge, the concerned assessment years were 1973-74 onwards. There is no dispute that with effect from April 1, 1973, Section 40a (7) was inserted in the Income-tax Act, 1961, and the said new section, since then, is governing the field. Therefore, the judgment passed by the Bombay High Court had no bearing in relation to the very subject-matter of the writ petition, i. e. , assessment year 1972-73. There is no dispute that with effect from April 1, 1973, Section 40a (7) was inserted in the Income-tax Act, 1961, and the said new section, since then, is governing the field. Therefore, the judgment passed by the Bombay High Court had no bearing in relation to the very subject-matter of the writ petition, i. e. , assessment year 1972-73. ( 3 ) IN Metal Box Company of India Ltd. v. Their Workmen, the Supreme Court held that contingent liabilities discounted and valued as necessary, can be taken into account as trading expenses, if they are sufficiently certain to be capable of being valued ; and an estimated liability under a scheme of gratuity, even if it amounted to a contingent liability, if properly ascertainable and its present value is fairly discounted, is deductible from the gross receipts while preparing the profit and loss account. In view of that decision and other decisions that followed it, it became permissible for an assessee, if he so chose to provide in his profit and loss account for the estimated liability under a gratuity scheme by ascertaining its present value on accrued basis and claiming it as ascertained liability to be deducted in the computation of the profit and loss account of the previous years. ( 4 ) FOLLOWING this judgment of the Supreme Court, a circular was issued by the Central Board of Direct Taxes on September 21, 1970, where it was provided that the Board has come to the conclusion, following that judgment of the Supreme Court, that the liability ascertained on account of provision for gratuity on a scientific basis in the form of an actuarial valuation carried out every year, cannot be considered as contingent liability and provision for such gratuity may be treated as an admissible deduction under Section 37 (1) of the Income-tax Act, 1961. In view of the said circular which is based upon the decision of the Supreme Court in the case of Metal Box Company of India Ltd. the provision made in the profit and loss account for the estimated present value of the contingent liability properly ascertained and discounted on an accrued basis as falling on the assessee in the year of account become deductible under Section 37 (1) of the Income-tax Act, 1961. ( 5 ) SINCE after the said judgment of the Supreme Court in Metal Box Company of India Ltd. and until insertion of Section 40a (7), in the said Act, in this field there was no alteration either by statute or by pronouncement of the Supreme Court. However, the Central Board of Direct Taxes on September 26, 1974, issued a fresh circular and therein provided that any allowance of such liability towards an unapproved gratuity fund under Section 37 (1) of the Income-tax Act shall not arise. The reason for giving this was apparently a judgment of the Supreme Court in Bombay Dyeing and Manufacturing Co. Ltd. wherein the Supreme Court had confirmed its views in Standard Mills Co. Ltd. v. CWT. The fact remains that Standard Mills Co. Ltd. 's case, was considered by the Supreme Court while delivering the judgment in Metal Box Co. of India Ltd. 's case. The Supreme Court distinguished the judgment in Standard Mills Co. Ltd. 's case by giving express reasons therefor. This aspect of the matter was also taken note of by the Supreme Court while delivering the judgment in Bombay Dyeing and Manufacturing Co. Ltd. 's case. The reason for distinguishing Standard Mills Co. Ltd. 's case was that in Standard Mills Co. Ltd. 's case, the Supreme Court was considering the debt in so far as wealth-tax is concerned and not the liability of an employer accrued during the year on account of gratuity. In that view of the matter, the circular dated September 26, 1974, is in direct conflict with the law laid down by the Supreme Court in Metal Box Co. of India Ltd. 's case. ( 6 ) IN Shree Sajjan Mills Ltd. v. CIT, the Supreme Court has laid down as to what was the law applicable in the field before Section 40a was introduced. While doing so, it took note of the judgment of the Supreme Court in Metal Box's case and held that provision made in the profit and loss account for the estimated liability properly ascertained on an accrued basis as falling on the assessee in the year of account could be deductible either under Section 28 or Section 37 of the Act. In that view of the matter, we are ad idem with the order of the learned trial judge, but for a different reason mentioned hereinabove. In that view of the matter, we are ad idem with the order of the learned trial judge, but for a different reason mentioned hereinabove. In this connection, it is our duty to point out that the judgment of the Bombay High Court relied on by the learned trial judge was ultimately set aside by the Supreme Court in the case of D. V. Bapat, ITO v. Tata Iron and Steel Co. Ltd. . But that does not stand at all in the way in respect of the view expressed above, in view of the fact that the Supreme Court in the said judgment itself noted the fact that for the assessment year 1972-73 the assessee in that case claimed deduction of a sum of Rs. 1,28,09,135 on the basis that the said amount represented its liability on account of gratuity on actuarial valuation and that claim was accepted by the Income-tax Officer pursuant to the circular dated September 21, 1970. Further, in that judgment itself, the Supreme Court referred to its own judgment in Shree Sajjan Mills Ltd. 's case, and ultimately remanded the matter to the High Court for disposal in accordance with the observation made by them which includes their observation to the effect that the provision of Section 40a (7) (b) (ii) has been considered by them in Shree Sajjan Mills Ltd. 's case and in that view of the matter the High Court should examine whether this provision has been complied with in the present case having regard to what has been laid down in that case. ( 7 ) IN view of the above we hold that Circular No. 146 (see [1975] 101 ITR (St.) 46), dated September 26, 1974, being in contravention of the law laid down by the Supreme Court in Metal Box Co. of India Ltd. 's case in so far as the law applicable for the assessment year 1972-73, is of no effect for that particular assessment year. ( 8 ) WE, therefore, dispose of the present appeal by directing the appellants to make a fresh assessment in accordance with the law for the assessment year 1972-73 as declared by the Supreme Court in Metal Box Co. of India Ltd. v. Their Workmen ignoring Circular No. 146 (see [1975] 101 ITR (St.) 46), dated September 26, 1974. ( 8 ) WE, therefore, dispose of the present appeal by directing the appellants to make a fresh assessment in accordance with the law for the assessment year 1972-73 as declared by the Supreme Court in Metal Box Co. of India Ltd. v. Their Workmen ignoring Circular No. 146 (see [1975] 101 ITR (St.) 46), dated September 26, 1974. ( 9 ) IT is made clear that for the assessment year 1973-74 onwards, the applicable law would be in accordance with Section 40a (7) of the Income-tax Act, 1961, as declared by the Supreme Court in Shree Sajjan Mitts Ltd. 's case, referred to hereinabove, and followed by the Supreme Court in the case of D. V. Bapat, ITO's case. ( 10 ) THERE will be no order as to costs. F. M. A. No. 725 of 1978 : in view of our discussions made in F. M. A. No. 568 of 1976, hereinabove, we hold that Circular No. 146 (see [1975] 101 ITR (St.) 46), dated September 26, 1974, being in contravention of the law laid down by the Supreme Court in Metal Box Co. of India Ltd. , in so far as the law applicable for the assessment year 1972-73, is of no effect for that particular assessment year. ( 11 ) WE, therefore, dispose of the present appeal by directing the appellants to make fresh assessment in accordance with the law for the assessment year 1972-73 as declared by the Supreme Court in Metal Box Co. of India Ltd. v. Their Workmen ignoring Circular No. 146 (See [1975] 101 ITR (St.) 46) dated September 26, 1974. ( 12 ) IT is made clear that for the assessment year 1973-74 onwards the applicable law would be in accordance with Section 40a (7) of the Income-tax Act, 1961, as declared by the Supreme Court in Shree Sajjan Mills Ltd. 's case referred to hereinabove and followed by the Supreme Court in the case of D. V. Bapat, ITO. ( 13 ) THERE will be no order as to costs. F. M. A. No. 726 of 1978 : in view of our discussions made in F. M. A. No, 586 of 1976, we hold that Circular No. 146 (see [1975] 101 ITR (St.) 46), dated September 26, 1974, being in contravention of the law laid down by the Supreme Court in Metal Box Co. F. M. A. No. 726 of 1978 : in view of our discussions made in F. M. A. No, 586 of 1976, we hold that Circular No. 146 (see [1975] 101 ITR (St.) 46), dated September 26, 1974, being in contravention of the law laid down by the Supreme Court in Metal Box Co. of India Ltd. , in so far as the law applicable for the assessment year 1972-73, is of no effect for that particular assessment year. ( 14 ) WE, therefore, dispose of the present appeal by directing the appellants to make fresh assessment in accordance with the law for the assessment year 1972-73, as declared by the Supreme Court in Metal Box Co. of India Ltd. v. Their Workmen [1969] 73 ITR 53 ignoring Circular No. 146 (see [1975] 101 ITR (St.) 46), dated September 26, 1974. ( 15 ) IT is made clear that for the assessment year 1973-74 onwards the applicable law would be in accordance with Section 40a (7) of the Income-tax Act, 1961, as declared by the Supreme Court in Shree Sajjan Mills Ltd. 's case and followed by the Supreme Court in the case of D. V. Bapat, ITO referred to hereinabove.