This is appeal filed by assessee. relevant assessment year is 1989-90. appeal is directed against order of CIT(A)-VII at Madras and arises out of assessment completed under s. 143(3) r/w s. 147 of IT Act, 1961. We heard Mrs. Aarti Vissanji, learned counsel appearing for assessee and Shri D.Z. Patel, learned Departmental Representative appearing for Revenue. first ground raised by assessee in this appeal is that CIT(A) has erred in not holding that reopening of assessment was bad in law. This ground is narrated in detail by assessee in three paragraphs under main ground "A." We considered this issue in light of discussion available in orders of lower authorities. We find that AO has rightly issued notice under s. 148 and reopened assessment under s. 147 and, therefore, ground raised by assessee against reopening of assessment is liable to be dismissed. second ground raised by assessee is that CIT(A) has erred in treating cash compensatory support received by assessee company as its income, following retrospective amendment to s. 28 of IT Act and ignoring relevant Tribunal decisions. Cash compensatory support is liable for taxation as result of amendment brought in by Finance Act, 1990 in s. 28 of IT Act by retrospective insertion of cls. (iiia), (iiib) and (iiic). This legislative amendment has superseded impact of various Tribunal decisions pointed out by assessee company. CIT(A) is right in law in holding that cash compensatory support was rightly brought to tax. This ground is, therefore, liable to be dismissed. third ground raised by assessee is regarding computation of book profit under s. 115J of IT Act. In P&L a/c and balance sheet prepared by assessee under provisions of Companies Act, 1956 and in tune with Sch. VI thereto, assessee company had not recognized/reflected gratuity liability arising as at close of accounting period. According to assessee, liability towards gratuity was worked out on basis of actuarial valuation and it was actually liability subsisting at closing of accounting period. In income-tax assessment, when book profit was to be computed, assessee submitted before assessing authority that gratuity liability being subsisting liability, amount should be deducted from book profit and provisions of s. 115J should be applied only on such reduced profit. This was not accepted by lower authorities and hence, this ground in present appeal. learned counsel, Smt. Aarti Vissanji argued on this point at length. She invited our attention to pp. 12 and 17 of paper book filed before us, relating to auditors report as well as notes on accounts forming part of P&L a/c and balance sheet as on 31st March, 1989. She invited our attention to qualification recorded by auditors in their report regarding non-provision of gratuity and also notes to accounts where it has been stated that liability towards gratuity payable to employees based on actuarial valuation worked out to Rs. 12,53,895. learned counsel invited our attention to provisions of law contained in s. 115J where it is stated that for purpose of s. 115J, book profit has to be worked out on basis of P&L a/c prepared in accordance with provisions of Parts II and III of Sch. VI to Companies Act, 1956 which, in fact provide that all charges to P&L a/c should be provided and only after such provision, book profit of company should be construed for purpose of s. 115J. She submitted that in present case, there is no dispute regarding liability of assessee company towards gratuity. gratuity liability has been worked out on basis of actuarial valuation. non-providing of gratuity liability in accounts has been qualified by statutory auditors in their report. All these matters are writ at large in accounts and reports of assessee company and made available to assessing authority and were existing at time of computing book profit for purpose of s. 115J. It is her case that non-providing of gratuity liability in accounts by assessee cannot be valid ground for AO to ignore submission of assessee altogether for reason that correct and proper book profit for purpose of s. 115J can be computed only if such legitimate charge is provided for in accounts. She submitted that computation of book profit for purpose of s. 115J should not be empty formality. provisions of Companies Act, 1956 provide for deducting all legitimate expenditures and charges in arriving at profit or loss of company. So long as gratuity liability is ascertained liability, it was necessary for assessee to debit same in its P&L a/c. Even though this has not been done by assessee company, that omission is not reason for AO to overlook that crucial factor and work out book profit for purpose of s. 115J on erroneous assumption that profit declared by assessee in its accounts was correct. AO must note that by non-providing for gratuity liability, profit as per P&L a/c of assessee company did not show correct profit. Non-consideration of relevant facts in finalising assessment is against law not only under IT Act but also under Companies Act, in present case. Every assessment should be made in accordance with law. learned counsel, therefore, submitted that CIT(A) should have directed AO to deduct gratuity liability from book profit of assessee company and technicalities should not have fettered deliverance of justice in present case. We considered issue in very detailed manner. It is true that auditors of assessee company have qualified non-provision made for gratuity liability. gratuity liability has been quantified by assessee company on basis of actuarial valuation and same has been given in notes to accounts forming part of P&L a/c and balance sheet. But, at same time, assessee has not explained reasons why provision for gratuity liability was not made in accounts and why liability was not debited to P&L a/c while working out profit for relevant year. We do not know what prompted assessee to withhold such item of deduction from P&L a/c. Moreover, when assessee put forward this claim before assessing authority at time of assessment in context of s. 115J, assessee has not made any attempt to explain whether P&L a/c of assessee company was revised or auditors have issued any supplementary report or assessee company was contemplating any such damage control exercise regarding statement of its accounts. assessee has not done anything in that direction. Now, question is whether in spite of profit reflected in P&L a/c prepared by assessee company should assessing authority have gone prepared by assessee company should assessing authority have gone further and made adjustment to profit declared by assessee as per its accounts for making provision for gratuity liability. Sec. 115J has provided for certain items by which book profit should be increased and certain other items by which book profit should be decreased. Those items of adjustment by way of increase/decrease are very much specified in provisions contained i n s. 115J. This particular item agitated in this appeal does not come in those items specified for adjustment by assessing authority. Supreme Court in Apollo Tyres Ltd. vs. CIT (2002) 174 CTR (SC) 521: (2002) 255 ITR 273 (SC) h s held that AO has no power to scrutinise accounts prepared in accordance with Parts II and III of Sch. VI to Companies Act scrutinized and certified by statutory auditors, except as provided in Explanation to s. 115J. AO is bound to accept authenticity of accounts with reference to provisions of Companies Act. Where auditors have certified accounts to be true and fair, of course subject to qualification that provision was not made for gratuity liability, still qualified as true and fair, AO had no onus cast on him to go beyond that accounts and make adjustments in favour of assessee especially when no reason has been put forward as to why liability was not made charge to P&L a/c. Therefore, we find that CIT(A) was right in law in holding that gratuity need not be adjusted while working out book profit for purpose of s. 115J. This ground is also liable to be dismissed. last ground raised by assessee is regarding set off of losses in light of s. 115J. This ground is also liable to be dismissed in light of decision of Supreme Court in case of Karnataka Small Scale Industries Development Corpn. Ltd. vs. CIT (2003) 179 CTR (SC) 1: (2002) 258 ITR 770 (SC). In result, this appeal filed by assessee is dismissed. *** GREAVES CHITRAM LTD. v. DEPUTY COMMISSIONER OF INCOME TAX