Jagannatha Shetty, J.—The following question has been referred under s. 256(1) of the I.T. Act :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in upholding the order of the Commissioner (Appeals), who directed the Income Tax Officer to allow the relief under Section 80J at full 7 1/2 % of the capital employed even though the under taking worked only for 1 1/2 months ?"

2. The simple facts behind the legal formulation are as follows :

The assesses company claimed relief under s. 80J of the Act for the full assessment year 1977-78, although the company started production only on May 16, 1976. The assessee's accounting year ended on June 30, 1976. The ITO allowed the relief pro rata for 1 1/2 months subsequent to the commencement of the commercial production. The assessee appealed against that order. The Commissioner (Appeals) held that the relief due to the assessee cannot be pro rata reduced for the period of commercial production and the assessee was entitled to full tax rebate for that year. He accordingly directed the ITO to recompute the relief at 7 1/2 per cent. of the capital employed by the assessee. The Revenue took up