B.S.Dhillon, J.

1. The following questions of law have been referred to this court for its opinion on a reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), by the Income-tax Appellate Tribunal, Chandigarh Bench :

" (1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in allowing the deduction under Section 80J of the Income-tax Act, 1961 ?

(2) If the answer to question No. 1 is in the affirmative, whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sum of Rs. 41,174, being the development rebate deducted in terms of Section 33 by the Income-tax Officer while determining the " gross total income " could not again be deducted from the sum of Rs. 47,027 which was claimed as a deduction from the " gross total income " under Section 80J(1) of the Income-tax Act, 1961 ? "

2. The brief facts giving rise to the case are that the assessee owns two flour mills and derives income mainly from grinding of wheat. During the previous year relevant to the assessment year 1967-68, the assessee-company had also set up a cold storage. The