( 1 ) THIS is a reference under Section 256 (1) of the I. T. Act, 1961. The assessment year is 1971-72. The relevant accounting year ended on 30th of June, 1970.

( 2 ) THE ITO allowed the development rebate under Clause (B) (i) of Section 33 (1) (b) of the I. T. Act, 1961, on plant and machinery which were installed and used by the assessee in the accounting year relevant to the assessment year under reference.

( 3 ) THE Addl. Commissioner was of opinion that the development rebate was erroneously allowed and it was also prejudicial to the interests of the revenue. He, therefore, gave an opportunity to the assessee of being heard.

( 4 ) THE assessee contended that the ITO was justified in allowing the development rebate as the plant and machinery were installed by the assessee for the purposes of manufacturing and producing jute ropes and jute twines.

( 5 ) THE Commissioner rejected the argument with a finding that the plant and machinery could not be regarded as installed for the purposes of business of manufacture or production of jute ropes and jute twines as the main business of the assessee was production of ropes from materials other than jute or cotton. He also