( 1 ) THIS reference under Section 256 (1) of the I. T. Act, 1961, relates to the assessment year 1971-72. It appears that the ITO did not allow relief under Section 80-I of the I. T. Act, 1961, as the assessee had not claimed the same in the return as required under the I. T. Rules. In this connection it may not be inappropriate to refer to the relevant portion of the order of the ITO which reads as follows:" (5) Development rebate for earlier year as detailed below: up to 68-69 A. Y. Rs. 23,79,623 69-70 " Rs. 6,94,995 70-71 " Rs. 15,82,829 Rs. 46,57,447 "

( 2 ) THEREAFTER, the ITO has observed as follows :"under Section 80-I on Rs. 4,60,42,731 @ 8%, i. e. , after adjustment of income under Section 41 (2), rent, sundry receipt, technical know-how and rebate allowed under Section 80g. Rs. 36,83,418 Rs. 2,47,82. 407 Total income: Rs. 2,31,02,004 Round off to : Rs. 2,31,02,000"

( 3 ) THERE was an appeal before the AAC. The AAC, relying upon the decision in the case of Indian Transformers Ltd. and Gurjargravures Pvt. Ltd. [1972] 84 ITR 723 (Guj), directed the ITO to allow relief to the assessee under Section 80-I on the gross total income before setting off of