C.S.P. Singh, J.

1. THE Tribunal has referred the following question of law for opinion of this court:

"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is legally justified in allowing a development rebate of Rs. 8,574 for the assessment year 1972-73 ?"

2. THE assessee-company came into existence on 31st August, 1971, by taking over the assets and liabilities of a partnership firm, M/s. U.P. Shoe Industries, Kanpur. THE company was incorporated by all the persons, who were partners of the erstwhile firm, as shareholders. It appears that the firm had installed some machinery a few months before the company took over the assets of the firm. THE company claimed development rebate on this machinery to the extent of Rs. 8,574. THE ITO disallowed the claim on the view that the machinery was not new and had been previously used by the firm. THE matter was taken up in appeal before the AAC who allowed the assessee's appeal on the view that all the conditions of Section 33(4) of the Act were fulfilled and as such development rebate as claimed by the assessee was allowable. THE revenue appealed to the Tribunal.

One of the contentions raised