SABYASACHI MUKHAKJI, J.

( 1 ) THIS reference under Section 256 (1) of the I. T. Act, 1961, relates to the assessment of an assessee, who is an individual, for the assessment year 1968-69, for which the previous year ended on 31st March, 1968. In the course of the assessment proceedings, the ITO took the view that development rebate was not allowable as the assessee's business had been converted into a private limited company which was not " succession " within the meaning of Section 33 of the I. T. Act, 1961. He, accordingly, rejected the claim for the development rebate for 1968-69. There was an appeal before the AAC. The AAC was of the view that the ITO was right in so far as he held that the conversion of the proprietary business into a limited company could not be considered to be a succession within the meaning of Section 33 of the Act. But, having noticed that the existence of the limited company was only with effect from 1st May, 1968, which was within the accounting period relevant to the assessment year 1969-70, the AAC held that the assessee had carried on business as a proprietary concern and the claim for development rebate was made in respect of machinery purchased an

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