Judgment :- N.K. JAIN, J. The Income-tax Appellate Tribunal, Madras Bench, at the instance of the Commissioner of Income-tax, Tamil Nadu-V, Madras, has stated a case under section 256(1) of the Income-tax Act, 1961 (hereinafter to be referred to as "the Act"), in relation to the assessment of the assessee for the assessment years 1978-79 to 1981-82 and 1984-85 and referred the following question of law for our consideration, "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the assessee's claim for bonus is admissible on accrual basis and not on payment basis ?" The assessee is a co-operative society. It made up its accounts taking the year ending June 30, as its accounting year and made a provision for bonus payable under the provisions of the Payment of Bonus Act. The assessee claimed deduction of the provision made towards the bonus, however, the Income-tax Officer disallowed the provision made for the years in question and allowed the actual payment of bonus only. The assessee preferred an appeal to the Commissioner of Income-tax (Appeals) and the Commissioner (Appeals) held that the provision for bonus made from year to year was based on statutory figures and accordingly, directed the Income-tax Officer to allow bonus on accrual basis instead of payment basis. The Revenue preferred an appeal to the Income-tax Appellate Tribunal, Madras Bench-A (hereinafter to be referred to "the Appellate Tribunal"). The Appellate Tribunal, on consideration, has held that the incurring of liability in accordance with the method of accounting regularly followed would entitle the assessee to claim deduction on the basis of the provision made in the accounts and dismissed the appeal preferred by the Revenue. The assessee preferred a petition in M. P. No. 20 of 1989 before the Appellate Tribunal praying for modification of the order, viz., notwithstanding the fact that the assessee is following the cash method of accounting, etc., into, "notwithstanding the fact that the assessee is assumed to be following the cash method of accounting, etc." , which was allowed by the Appellate Tribunal. The Appellate Tribunal, at the instance of the Commissioner of Income-tax, Tamil Nadu-V, Madras, has referred the case to us as stated aboveMr. The Appellate Tribunal, at the instance of the Commissioner of Income-tax, Tamil Nadu-V, Madras, has referred the case to us as stated aboveMr. O. Anand Ram, learned junior standing counsel for the Department, submitted that though in the order of assessment, there is no finding of the Income-tax Officer that the assessee has been maintaining the cash method of accounting, the Tribunal proceeded on the basis that even in case the assessee had maintained the cash method of accounting, the liability to pay bonus is allowable on accrual basis. He submitted that it is not permissible for the assessee to claim double deduction, one at the time of payment and another at the time when the provision for bonus was made in the accounts. Learned counsel relied upon the decision of the Allahabad High Court in the case of Dhampur Sugar Mills Ltd. v. CIT, and submitted that this court may direct the assessee to follow a regular system of accounting so that double deduction can be avoided. Mr. V. S. Jayakumar, learned counsel for the respondent, on the other hand, submitted that the assessee has been maintaining its books of account consistently and on the basis of the regular system of accounting maintained by the assessee, the assessee is entitled to claim deduction for the bonus on the basis of the provision made in the accounts. Learned counsel also submitted that the assessee has not claimed double deduction, one at the time of payment and another at the time of making entries in the account books. He further submitted that the accounts of the assessee-co-operative society have been audited by the statutory auditors and on the basis of the certificate issued by the statutory auditors, the provision has been made and since the assessee has been consistently following a system of accounting which has been accepted by the Department, the Appellate Tribunal has come to the correct conclusion in holding that the assessee is entitled to the deduction for provision towards bonus made in each accounting yearWe have heard learned counsel for the parties and perused the material on record. In the facts of the given case, there is no dispute about the quantum of bonus payable being excessive or beyond the limit laid down by the provisions of the Bonus Act. It is a settled proposition that the employer is bound to pay the statutory bonus. In the facts of the given case, there is no dispute about the quantum of bonus payable being excessive or beyond the limit laid down by the provisions of the Bonus Act. It is a settled proposition that the employer is bound to pay the statutory bonus. The dispute before us relates only to the nature of the liability and the admissibility of the provision made towards the bonus. Once the Income-tax Officer found that the assessee has been following regularly the procedure for income and expenditure accounting and the same is being followed by the assessee year to year, then, the assessee is entitled to claim deduction on the basis of the provision made in the accounts. Under the circumstances, we find that the Appellate Tribunal has rightly held that on the basis of the method of accounting regularly followed by the assessee, the assessee would be entitled to claim deduction on the basis of provision made in the accounts on the basis of the certificate issued by the statutory auditors and not necessarily on the basis of payment as the said system of accounting was regularly followed by the assessee year after year and it was a regular method of accounting accepted by the Department. So, we are of the opinion that the assessee is entitled to claim deduction for the provision for bonus and since it is a statutory liability, it ought to have been deducted. Further, it is made clear that the assessee should consistently follow the liability method and not the actual payment basis for subsequent assessment years as per the decision of the Allahabad High Court, cited supra. We find no error of law in the order of the Appellate Tribunal. Accordingly, we answer the question referred to us in the affirmative, against the Revenue and in favour of the assessee. No costs.