JUDGMENT [ENTITY], J.
1. The two questions referred under the provisions of the [ACT] ("the Act" for short), read thus :
"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in confirming the orders of the Commissioner of Income-tax (Appeals) who held that the assessee is entitled to depreciation on roads when they do not constitute either machinery or plant ?
(2) Whether, on the facts and in the circumstances of the case, the provisons made towards pension fund was an admissible deduction under [SECTION] of the [ACT] ?"
2. Following the decision of this court in [PRECEDENT] [1984] 150 ITR 23, the first question is answered in the affirmative and against the Revenue.
3. The relevant assessment years are 1978-79 and 1979-80. The assessee is a statutory corporation; it has to provide for the payment of pension to its employees; accordingly, it had made a provision towards the same. The amount of contribution made to the pension fund was allowed under [SECTION] by the Commissioner (Appeals). The appeals were filed by the assessee and the Revenue. The assessee contended that the entire provision towards the pension fund should have been allowed, while the Revenue contended that there was no approved fund and the subject is covered by [SECTION] of the Act and hence no amount was deductible under [SECTION] on this account.
4. The Appellate Tribunal held that the decision of the courts in respect of gratuity prior to the insertion of [SECTION] would equally govern the provision for pension fund and hence accepted the assessee's claim in principle; the matter was remanded to the Income-tax Officer to ascertain the exact amount to be allowed. Hence, the Revenue has sought these references.
5. Sri [ENTITY] referred to [SECTION] of the Act and urged that the subject of superannuation fund was covered by the said provision and hence, unless the payment is made to an approved superannuation fund, the payment is not deductible. [SECTION] was read to point out that deductible expenditure under [SECTION] is the one not being of the nature described in [SECTION]; since pension fund is the one which is in the "nature" of a superannuation fund, [SECTION] is not attracted.
6. In the case of gratuity, it has been held that though [SECTION] is attracted, still deductions are permissible under [SECTION] (now, of course, it is subject to [SECTION]. In fact, Sri [ENTITY] , learned counsel for the assessee, contended that the insertion of [SECTION] is a clear indication of the legislative intention not to restrict the deductibility of as expenditure towards non-gratuity funs and the fact that only "gratuity" was subjected to certain restrictions under [SECTION], and other payments are to be treated differently. Similarly, in respect of provision for provident fund also, [SECTION] has been applied to grant the relied, though [SECTION] refers to the subject of a recognised provident fund . The contention of the Revenue has been accepted by the Madras High Court in [PRECEDENT], wherein it was held that the prohibition against grant of relief under [SECTION], in respect of the matters covered by [SECTION], is implicit in the Act, as otherwise, [SECTION] will become nugatory.
7. However, a Bench of this court in [PRECEDENT] held that contributions made to the employees' provident fund, though not a recognised fund, were deductible under [SECTION]. At page 140, the Bench held :
"So far as the second question is concerned, the view taken by the Tribunal is that though the provident fund scheme would not come within the ambit of [SECTION], the expenditure was wholly and exclusively for the purpose of business and came within the purview of [SECTION] of the [ACT]. The mere fact that the contribution could not come within the ambit of the provisions of [SECTION] would not disentitle the assessee to claim the benefit under [SECTION] if the requirements thereunder were satisfied. There is no dispute that the expenditure was wholly and exclusively for the purpose of business. Therefore, it was deductible in computing the income chargeable under the head 'Profits and gains of business.'"
8. We are told that the Revenue has not taken up this matter in appeal and the decision has been accepted by the Department; if so, one immediate question to be considered is, should we proceed with the exercise of examining the main question again.
9. In [PRECEDENT], this court held that the conduct of the Department in not preferring appeals against other judgments deciding an issue against the Revenue may be taken to mean that the Department has accepted the ratio of the earlier decision (vide page 672). Sri [ENTITY] referred to this decision to contend that the ratio of the decision of this court in Karnataka State Warehousing Corporation's case [PRECEDENT] should be followed and there is no reason why this Bench should disagree with it and refer the question to a larger Bench.
10. The main question is not free from doubt, Substantial reasoning can be found in support of the rival propositions. In such a situation, a practical against the stand of the Revenue. Unless strong reasons exist, normally the earlier decision of a Division Bench should be followed by the subsequent Bench. The latter Bench, if it disagrees with the earlier view, can only refer the question to a larger Bench. But, this is done only in rare cases where public interest requires reconsideration of the earlier view if the earlier view is patently erroneous.
11. Apart from the decision of this court in Karnataka State Warehousing Corporation's case [PRECEDENT], the decisions of the Calcutta and Gujarat High Courts also support the assessee's case. [PRECEDENT] is the decision of the Calcutta High Court. In pursuance of a statutory requirement under the [ACT], a special liability was claimed as a deduction under [SECTION] reasonable amount was allowed as a deduction by the Income-tax Officer. The High Court held that a prudent estimate of the liability was entitled to deduction under [SECTION]; the contention that gratuity is a subject covered by [SECTION] and hence deduction could be claimed only on satisfying its provisions was not accepted. At page 704, the Bench held :
"The fact that, under clause (v) of sub-section (1) of [SECTION] of the Act, the sum paid by the assessee by way of contribution towards an approved gratuity fund for the exclusive benefit of the employee is deductible does not, in our opinion, affect the position. The assessee claimed its right to deduct this sum because this amount was a special liability which, we have noticed before, was created for the first time in 1971."
12. In [PRECEDENT], the Gujarat High Court also expressed a similar view with regard to the contributions made to a non-recognised provident fund. The payments to the fund were held to have been made on the ground of commercial expediency and hence deductible under [SECTION]. After referring to a few decisions and the principle applicable to the case, the High Court held at page 707 :
1"It is obvious that, in the instant case, when contribution was made by the assessee-company for the provident fund amount of the employees even when there was no recognised fund in existence, it would be justifiable on the ground of commercial expediency, so as to keep their workers satisfied and thus this was a payment made for the purpose of earning the profits of the business by the assessee or in the course of earning profits of the business by the assessee."
13. In the instant case, the provision made by the assessee is to meet its statutory obligation, since this statutory corporation is obliged to pay pension to its employees under the rules governing it; there is no dispute about this fact. The concept of commercial expediency is not foreign to a statutory corporation like the instant assessee which is obliged to carry on a venture which any other commercial enterprise also can carry on.
14. In these circumstances, we are of the opinion that there are no compelling reasons for us to differ from the earlier view stated in Karnataka State Warehousing Corporation's case and, accordingly, we accept the same.
15. The second question referred is answered in the affirmative and against the Revenue.
16. References answered accordingly.