JUDGMENT

PATHAK, CJI. :— These appeals by special leave are directed against a judgment of the High Court of Punjab and Haryana disposing of an Income-tax Reference in favour of the respondent-assessee.

2. The assessee manufactures straw board. For the assessment years 1965-66, 1966-67 and 1967-68 (the relevant previous years being the respective calendar years 1964, 1965 and 1966), the assessee claimed concessional rates of income-tax, development rebate at higher rate and deduction under S. 80-E of the Income-tax Act, 1961 on the ground that the manufacture of strawboard was a priority industry. For the assessment year 1965-66 the total income assessed was Rs. 17,71,334/- and against the basic rate of 80 per cent the assessee claimed rebate at the rate of 35 per cent up to Rs. 10,00,000/- and on the balance at 26 per cent. The Income-tax Officer allowed the rebate at 30 per cent up to Rs. 10,00,000/- and at 20 per cent on the balance. For the assessment year 1966-67 the assessee claimed development rebate under S. 33 of the Income-tax Act at the rate of 25 per cent on the value of the machinery installed after 1 April, 1965 worth Rs. 34,287/-, but rebate was allowed at 20 per cen