VARADARAJAN J.

The question referred by the Income-tax Appellate Tribunal, Bangalore Bench, for the opinion of this court, at the instance of the assessee is this

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that in computing the actual cost for the purpose of calculating development rebate under s. 33 no upward adjustment of Rs. 2, 64, 24, 737 which the assessee had to bear as a result of devaluation of the rupee should be made ?" *

The assessee, a resident shipping company, returned a loss of Rs. 13, 31, 088 for the assessment year 1967-68, claiming a development rebate of Rs. 7, 32, 79, 891 at the rate of 40 per cent. on the cost of two ships after taking into account the effect of devaluation of the rupee on June 6, 1966. The ITO allowed development rebate to the extent of only Rs. 5, 71, 94, 305 which alone, according to him, represented the development rebate on the actual cost of the imported ships on the ground that while s. 43A(1) of the I.T. Act provides for extra depreciation allowance on account of the effect of devaluation, there is no provision in the Act for allowing development rebate on the increased liab