Ajit K.Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1978-79, the following question of law has been referred to this court : "Whether, on the facts and in the circumstances of the case, the Tribunal Was justified in law in holding that the assessee was entitled to investment allowance and in directing the Income-tax Officer to give the assessee opportunity of creating a reserve before allowing the investment allowance ?"
(2.) Shortly stated, the facts are that the assessee-company which is engaged in the manufacture of nylon yarn claimed investment allowance on a sum of Rs. 4,04,741 representing additional liability referable to acquisition of assets resulting from variation in the rate of exchange relating to the foreign loan liability which has been added to the cost of plant and machinery. The Income-tax Officer, for the reasons given in his assessment order, did not accept the assessee's claim.
(3.) On appeal, the Commissioner of Income-tax (Appeals) held that the Income-tax Officer was justified in rejecting the assessee's claim as no material had been placed by the assessee before him to justify the granting of investment allowance of Rs. 4,04,741, and the assessee had not created any reserve as prescribed in the Act.;