ORDER A.L MATHUR, J : This is a reference under s. 256(2) of the IT Act, 1961, at the instance of the Revenue, and the, following questions give, been referred by the the Tribunal for answer by this court: I. Whether on the facts and in the circumstances of the, case, the learned Tribunal was right in law in holding that the provisions towards bonus payment at Rs. 1,09,932.00 was allowable for, deducted ? 2. Whether there was any material on record and if so, whether they were significant for the Tribunal to hold that the legal liability Was in fact incurred during the accounting period ?' 2. The assessee is a registered firm. During the year under consideration, it had carried on business of bidi manufacture and its sale. It had made a provision for Rs. 1,09,932 towards bonus which undisputably was not paid to its employees upto the last date of accounting year. The assessee had claimed that this amount of provision was deductible from its profit. The claim other assessee rested on two grounds, namely, (i) that it was maintaining. its, accounts on mercantile system and (n) it was within the purview of s. 43B. 'Its, second reasoning was given in the footnote on the computation sheet filed along with the return of income. Return was filed on 8th Aug., 1984. 3. During the assessment proceedings, the issue was decided on assessee's reasoning that bonus was part of the salary or wages and, therefore it did not come within the ambit of 'fund for the welfare of employees'. The AO, on the contrary, held that it was a fund for the welfare of the employees. According to the AO, since it was part of the fund for the welfare of the employees, provisions of s. 43B were applicable. He, therefore, disallowed the claim. The assessee preferred an appeal before the CIT(A) which was dismissed. The assessee then performed an appeal before the Tribunal. The Tribunal allowed the appeal by holding that provisions of s. 43B(b) were not applicable and provision was actually made and they were told that the- Labour Court had ordered them to pay the bonus. Therefore, the Tribunal allowed the claim of the assessee and set aside the orders passed by the AO, and the CIT(A). 4. In fact cl. The Tribunal allowed the appeal by holding that provisions of s. 43B(b) were not applicable and provision was actually made and they were told that the- Labour Court had ordered them to pay the bonus. Therefore, the Tribunal allowed the claim of the assessee and set aside the orders passed by the AO, and the CIT(A). 4. In fact cl. (c) of s. 43B of the IT Act came to be inserted for the first time w.e.f. 1st April, 1989. Therefore, it was not in existence at that time and cl. (b) was not applicable, because the bonus did not fall in the extended expression of the fund for the welfare of the employees and accordingly the Tribunal permitted the deduction. 5. We have considered the submissions of the learned counsel for the parties and are of the opinion that the view taken by the Tribunal is justified. 6. Accordingly the reference is answered against the Revenue and in favour of the assessee.