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JUDGMENT Divan, CJ. -In this case, at the instance of the revenue, the following two questions have been referred to us by the Appellate Tribunal: "(1)Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee cannot be denied the benefit of carry forward of development rebate ? (2)Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing that the Income-tax Officer should determine the development rebate and such development rebate should be allowed to be carried forward and set off when profits are available and if, in that year, the assessee fulfils the necessary requirements for such allowance like creation of adequate reserve?" In the instant case we are concerned with the assessment year 1962-63. The assessee before us is a limited company and at the relevant time was running a textile mill at Cambay in the State of Gujarat. The accounting period of the assessee for the assessment year 1962-63 was the calendar year 1961 ending on December 31, 1961. For this particular year the assessee claimed that a sum of Rs. 1,26,223 should be considered as the development rebate allowable to it under the provisions of section 33 of the Income-tax Act, 1961. The assessee had not created a reserve as contemplated by section 34(3) of the Act of 1961. The Income-tax Officer declined to entertain the claim on the ground that the assessee had not complied with the conditions of admissibility under section 34(3) of the Act of 1961. Before the Appellate Assistant Commissioner the same contention was urged as regards the claim for development rebate. This appellate officer agreed with the views of the Income-tax Officer and held that, as the assessee had not satisfied the preconditions mentioned in section 34(3), the assessee could not claim the development rebate. The matter was carried in further appeal before the Appellate Tribunal by the assessee and so far as development rebate was concerned, the contention of the assessee was that the Income-tax Officer should have determined the development rebate and allowed the assessee to carry forward the development rebate to subsequent…

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