Rastogi, J.

1. THIS is a reference under Section 256(1) of the I.T. Act, 1961, and it relates to the assessment year 1974-75, the corresponding previous year ended March 31, 1974. The assessee, a registered firm, had constructed four warehouses at a cost of Rs. 2,89,064. In the relevant previous year its main business was to book space for storing potatoes on behalf of its customers on rent agreed to with M/s. Kanodia Cold Storage and thereafter realise hire charges from the customers for storage of potatoes. The nature of the business was that the assessee stored the potatoes of its customers in its warehouses for sorting and grading and thereafter loaded the same in the cold storage. For the year under consideration, the assessee declared a loss of Rs. 27,410. It had charged development rebate at Rs. 58,360 in respect of those warehouses. The ITO did not accept the assessee's claim in regard to the development rebate since in his opinion the warehouses of the assessee were merely godowns and did not fulfil the requirement of Section 33 of the Act. Further, in his opinion, the machinery or plant must be installed so as to claim development rebate and since it could not be