1. This appeal was disposed of by the Tribunal on 18-4-1981. The subject-matter of the appeal was withdrawal of development rebate of Rs. 1,30,386 under Section 155(5) of the Income-tax Act, 1961 ('the Act'), for the assessment year 1967-68. The previous year for the assessment year 1967-68 ended on 12-11-1966. The assessee created development rebate reserve of Rs. 98,200 in its books of account for the relevant previous year, namely, samvat year 2022 and obtained development rebate of Rs. 1,30,386. On 13-11-1974, that is, on the last day of the previous year relevant to the assessment year 1975-76, the assessee closed the development rebate reserve account and transferred the balance to the partners' capital accounts. We are here concerned with the reversal of the entry of Rs. 98,200 which was the reserve created in the previous year relevant to the assessment year 1967-68.
The reversal of the entry regarding reserve of Rs. 6,286 created in samvat year 202J is not in dispute. The ITO held that by crediting the development rebate reserve to the partners' account, the firm violated the provisions of Section 34(3)(a), of the Act. Accordingly, he invoked Section 155(5) and withdrew the rebate. The Commissioner (Appeals), however, held that the assessee had committed only a technical error and as it reversed the entries re-crediting the development rebate reserve account with effect from the last day of the accounting year, the assessee did not deserve to be penalised by withdrawal of the rebate.
2. The revenue appealed and the Tribunal held that as the development rebate reserve had been utilised by the partners, the ITO was justified in withdrawing the development rebate under Section 155(5). The assessee then filed a Miscellaneous Application No. 9 (Nag.) of 1981 [IT Appeal No. 265 (Nag.) of 1980]. In that application it was urged that an argument had been advanced on behalf of the assessee that the development rebate reserve had to be kept intact for eight calendar years and not eight previous years as interpreted by the revenue and this argument had not been considered and disposed of by the Tribunal.
It was requested that our order should be recalled and the matter disposed of. There was another contention that the crediting of the partners' account would not amount to distribution of profit and was thus not hit by Section 155. The Tribunal rejected the later contention, but posted the case for hearing to dispose of the contention raised by the assessee not considered by it in the earlier order.
3. The learned counsel for the assessee submitted that Section 34(3)(a) prohibited the assessee from utilising the development rebate reserve for distribution by way of dividends or profits or for remittance outside India or for the creation of any asset outside India in a period of eight years next following the end of the previous year in which the reserve was created. He urged that the words 'eight years' have to be given the natural meaning, that is, the calendar year. In the present case, the assessee created the reserve in the year ending on 12-11-1966. Eight calendar years ended on 12-11-1974. On 13-11-1974, the assessee transferred the reserve to the partners' capital accounts, that is, the transfer took place after the completion of eight calendar years referred to.
It was, thus, pleaded that the requirements of Section 34(3) had been fulfilled and the ITO should not have invoked the provisions of Section 155(5). Reliance was also placed on the decision of the Gujarat High Court in Vikram Mills Ltd. v. ITO  105 ITR 423 to the effect that the assessee should not be penalised for technical breach of the provisions.
4. The learned departmental representative, on the other hand, stated that the words used in Section 34(3) do not leave any doubt as regards the meaning of the word 'year'. The reserve was to be credited in the previous year in which the machinery was installed. It had to be kept intact for eight more years which would obviously mean eight succeeding previous years. He submkted that this interpretation would follow from the principle of ejusdem generis.
5. We have considered the submissions made by the rival parties.
Section 34(3)(a) reads as follows : 34(3)(a) The deduction referred to in Section 33 shall not be allowed unless an amount equal to seventy-five per cent of the development rebate to be actually allowed is debited to the profit and loss account of the relevant previous year and credited to a reserve account to be utilised by the assessee during a period of eight years next following for the purposes of the business of the undertaking, other than- (ii) for remittance outside India as profits or for the creation of any asset outside India : Provided that this clause shall not apply where the assessee is a company, being a licensee within the meaning of the Electricity (Supply) Act, 1948 (54 of 1948), or where the ship has been acquired or the machinery or plant has been installed before the 1st day of January, 1958 : Provided further that where a ship has been acquired after the 28th day of February, 1966, this clause shall have effect in respect of such ship as if for the words 'seventy-five', the word 'fifty' has been substituted.
The other portions of the section which are not relevant have not been quoted by us. The first condition is about the creation of a reserve.
This reserve is to be created out of the profits of the assessee. The point of time by which the requisite reserve was to be created was considered by the Supreme Court in Indian Overseas Bank Ltd. v. CIT  77 ITR 512. It was held there that the transfer to the reserve fund should be made at the time of making up the profit and loss account. The Court accordingly held that the debit to the profit and loss account against the credit to the development rebate reserve should be made at the time when the profit and loss account is made.
Since the profit is ascertained at the end of the previous year, the Legislature provided that the debit to the profit and loss account to create a reserve for development rebate should be done in the relevant previous year. But so far as the period during which the development rebate reserve was to be maintained in the books of account without disturbing it as profits, it has not used the words 'during a period of eight successive accounting years next following'.
We have, therefore, to interpret these words and explain whether eight years mean eight calendar years or eight previous years following. We have to make it char that we have used the words 'previous year' in the sense in which it is defined in the Act, namely, the eight previous years which would be relevant to the succeeding eight assessment years.
6. According to the General Clauses Act 'year' means a 'calendar year'.
This has been explained by the Madras High Court in CIT v. Kadri Mills (Coimbatore) Ltd.  106 ITR 846. There the Court was interpreting the word 'month' occurring in Section 27l(1)(a) of the Act. It was held that 'month' means the 'calendar month'. Following the above High Court's decision, we hold that the word 'year' used in Section 34(3)(c) means 'calendar year'.
7. Next, we have to consider whether the above interpretation would lead to any absurd interpretation. The first primary rule of construction is that the literal construction should be followed.
Omissions are not to be inferred. It is obvious that there is no warrant for interpreting the words 'eight years' as something other than 'eight calendar years'. The omission of the words 'previous year' cannot be inferred. Next it is to be considered whether there is manifest absurdity or repugnancy in the interpretation in which case the language has to be varied or modified as to avoid inconvenience, but no further. We do not find any absurdity in the above interpretation. In fact, we have held that the period of eight years is to be taken as eight calendar years. The duration of the previous years being different for different assessees, some assessees would be required to keep the reserve intact for longer periods than others if the interpretation canvassed by the revenue is accepted. On the contrary, if the section is interpreted as to mean that the period is 'eight calendar years', it would be the same for all assessees and the construction placed by us is fair and reasonable.
8. Next, we consider the argument of the learned departmental represen-regarding the application of the principle of ejusdem generis.
This principle tative is not applicable at all. This rule would be applicable when a general word follows specific words. There should be a group of words of a specific nature followed by a general word indicating the class to which the word belongs. No such situation arises here.
9. For the reasons given above, we hold that the ITO was not right in withdrawing the development rebate reserve under Section 155(5). The assessee's appeal is accordingly allowed.
10. Reference Application No. 109 (Nag.) of 1981 - For the reasons given in our order, we dismiss the reference application of the assessee as infructuous.