We are of considered view that the matter need to be restored to the file of the AO for fresh adjudication and the assessee is directed to produce agreement/settlement with the employees which is valid and effective for year under consideration and based on that the AO shall adjudicate the matter afresh keeping in view the provisions of Sec.37(1), 36(1)(ii) and 43B of the 1961 Act and also ratio of decision of the Hon’ble Madras High Court in the case of CIT v. Lakshmi Mills Co. Ltd., reported in 154 CTR 0182(Mad.) and Hon’ble Madras High Court decision in the case of CIT v. Sivanandha Mills Ltd., [1987] 63 CTR 11(Mad.) The assessee is directed to appear before AO and furnish relevant agreements/settlement which is applicable/relevant for previous year relevant to impugned ay and to justify that the provisions as aforesaid were made by it as per settlement arrived at with its employees as applicable to the impugned ay. The AO is also directed to verify claim of assessee that income-tax was deducted at source on such provision in subsequent assessment year and said amount was duly paid in subsequent year to employees. The AO shall also verify that there is no double deduction of the said amount in subsequent years , by verifying assessment record of subsequent years. We order accordingly.