Ajit K.Sengupta, J. - (1.) In this reference under Section 256(2) of the Income-tax Act, 1961, for the assessment year 1972-73, the following two questions of law have been referred to this court: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was entitled to carry forward the balance of Rs. 2,96,308 by way of development rebate in the absence of creation of any appropriate reserve in the accounts of the year in question ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee is entitled to the full amount of development rebate totalling to Rs. 8,29,641 ?"
(2.) The facts shortly stated are that the assessee, who is engaged in the manufacture of textile goods, claimed before the Income-tax Officer development rebate of Rs. 8,29,641 but credited development rebate reserve of Rs, 4 lakhs only. This reserve credited fell short of the statutory requirement of 75% of the claim for development rebate. The Income-tax Officer, therefore, allowed development rebate to the extent of Rs. 5,33,333 corresponding to the reserve created of Rs. 4 lakhs. This was partly set off against the available profit of Rs. 1,10,047 computed by the Income-tax Officer and the unabsorbed development rebate of Rs. 4,23,286 (Rs. 5,33,333 minus Rs. 1,10,047) was carried forward by the Income-tax Officer.
(3.) The assessee went up in appeal before the Appellate Assistant Commissioner against the order of the Income-tax Officer. Following the decision of the Calcutta High Court in West Laikdihi Coal Co. Ltd. v. CIT [1973] 87 ITR 501, the Appellate Assistant Commissioner held that the entire sum of Rs. 8,29,651 was allowable as development rebate and directed the Income-tax Officer to carry forward the balance of Rs. 2,96,308 being the difference between the development rebate claimed by the assessee and that allowed by the Income-tax Officer.;