Judgment :- R. JAYASIMHA BABU, J. For the asst. yrs. 1972-73 and 1973-74, the following two questions of law had been referred at the instance of the Revenue : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in deleting the disallowance of interest of Rs. 45, 400 and Rs. 60, 900 attributable to the borrowals diverted to M/s. Indian Express Newspapers (Bombay) (P) Ltd., through M/s. Ace Investments Ltd. in the assessments for the years 1972-73 and 1973-74 respectively ? (2) Whether, on the facts and in the circumstances of the case the Tribunal was right in deleting the disallowances of provision for gratuity of Rs. 3, 23, 687 made in the assessment for the asst. yr. 1972-73 ?" Regarding the first question our answer has to be in the negative, in favour of the Revenue and against the assessee in the light of our decision rendered in T.C. No. 846 of 1984 [reported as CIT vs. Indian Express Newspapers (Madurai) (P) Ltd. 1998 (150) CTR(Mad) 647 : TC S15.1575] between the same parties in respect of another assessment year of the assessee. The interest that was disallowed by the ITO was on the sum of Rs. 10, 00, 000 which the assessee claimed to have borrowed and used for the purpose of its business, but was, in fact, found to have been diverted, to its associated company at Bombay for a building of its own, such diversion having been effected through Ace Investments Ltd. equity capital. The assessee showed an investment of Rs. 10, 00, 000 and on the same day the amount was remitted by the subsidiary to the assessee's associate company at Bombay. It was found by the ITO that though in the first year the interest income was shown by subsidiary in subsequent year interest was paid and the office of the subsidiary was shown as the same that of the assessee and it was the staff of the assessee who wrote the books of the account of the subsidiary. The amount of Rs. The amount of Rs. 10, 00, 000 so diverted was, therefore, held by us in T.C. No. 846 of 1984 (supra), to be the amount not utilised in the business of the company, consequently disentitling the assessee to deduct the amount of interest stated to have been paid on that amount of borrowing.So far as the second question is concerned, the Tribunal's views is the correct view. The Tribunal affirmed the order of the CIT(A) who had directed the ITO to allow the petitioner's claim for deducting the provision made for gratuity subject to the production of a certificate by the assessee regarding the scientific basis of this provision. That order of the Tribunal is in accordance with the law laid down by the Supreme Court in the case of Shree Sajjan Mills Ltd. vs. CIT. It was held by the apex Court that nature of employee's right to receive payments of gratuity actually made to the employee on his retirement or termination of his services and that the provision made in the P&L a/c 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 could be deducted either under s. 28 or s. 37 of the Act, prior to the introduction of s. 40A(7) of the Act which was inserted in the year 1973. The assessment year for which the claim was made by the assessee being for the asst. yr. 1972-73 before the introduction of s. 40A(7) of the Act, the order made by the Tribunal was in accordance with the law which was applicable for the assessment year. The second question, is, therefore, answered in favour of the assessee and against the Revenue. Parties to bear their respective costs.