Satish Chandra, C.J.

1. MESSRS. Vishnu Industrial Enterprises (Private) Ltd., Kanpur, the assessee, suffered losses in the assessment years 1967-68 and 1968-69. It, however, claimed development rebate in respect of plant and machinery installed in those years. The ITO repelled the claim on the view that the assessee had not debited the profit and loss account, nor created the development reserve. The Supreme Court decision in Indian Overseas Bank Ltd. v. CIT [1970] 77 ITR 512 applied and no development rebate was allowable.

2. ON appeal, it was held that since there was no profit, development reserve could not be created, but the development rebate should have been calculated and allowed in a succeeding year in which the assessee earned profits and created the requisite reserve. The ITO was directed to determine the development rebate admissible to the assessee.

The ITO appealed. The Tribunal affirmed the view of the AAC.

3. AT the instance of the Commissioner, the Tribunal has referred for our opinion the following question of law :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in upholding the direction given by the Appell