SABYASACHI MUKHARJI, J.

( 1 ) IN this reference, under Sub-section (1) of Section 256 of the I. T. Act, 1961, for the assessment year 1967-68, the following questions have been referred to this court for answer ;"1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the increase in liability of Rs. 1,75,99,854 due to devaluation was not deductible in computing the assessee's business income ? 2. If the answer to question No. 1 is in the affirmative, whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the alternative claim of the assessee-company for development rebate under section 33 of the 'income-tax Act, 1961, on Rs. 1,09,24,832 was not admissible under the provisions of the Act ?"

( 2 ) IN order to appreciate these questions, it is necessary to state certain facts. The assessee is a limited company and, as mentioned hereinbefore, the reference relates to the assessment year 1967-68. The assessee-company under an agreement dated August 16, 1963, had taken a loan from the Export Import Bank of Washington for making payment in the United States of America of

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