JUDGMENT
1. The Tribunal, Allahabad, has referred the following questions of law under Section 256(2) of Income-tax Act, 1961 (hereinafter referred to "the Act"), for opinion to this Court :
"1. Whether, on the facts and in the circumstance of the case, the Tribunal was legally correct in holding that the plastic manufactured by the assessee was petro-chemical within the meaning of item No. 18 of the Sixth Schedule and, hence, entitled to the relief under Section 80I r/w Section 80B(7) of the IT Act ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the assessee was entitled to the allowance of development rebate at the higher rate of 35 per cent under Section 33(1)(b)(B)(i)(a) of the IT Act ?"
2. Briefly stated, the facts giving rise to the present reference are as follows :
The respondent-assesses is a company engaged in manufacture of plastic goods and certain machinery parts for the use by sister-concerns. The matter relates to the asst. yr. 1970-71, relevant accounting year ending on 20th June, 1969. In the IT return and during the assessment proceedings, the respondent-assessee claimed deduction under Section 80I r/w Section 80B(7) of the Act in respect of its profits and rebate at the higher rate of 35 per cent under Section 33(1)(b)(B)(i)(a) of the Act for the plant and machinery used for the manufacture of plastic. The respondent-assessee explained to the ITO the circumstances under which he was entitled to claim deduction and higher rate of development rebate, which the ITO did not accept that the respondent-assessee utilized the raw materials which were petro-chemicals. According to him, the assessee neither manufactured any petro-chemical products from the petroleum base nor any corresponding synthetic product from hydro-carbons or other raw materials noted in item 18 of VI Schedule to the Act, He, therefore, concluded that the assessee was not engaged in priority industry. The ITO further held that the assessee had not maintained any separate account of manufacture of machinery parts for the use by sister-concerns and its claim was not verifiable. In appeal, though the respondent-assessee reiterated the aforesaid contentions, the AAC upheld the order of the ITO. The respondent-assessee went up in appeal before the Tribunal. Inviting the attention of the Tribunal to its explanation, extract from Hackh's Chemical dictionary, the opinion of Dr. G.N. Mathur, a decision of 'D' Bench, Bombay, in the case of Nirlon Synthetic Fibres and Chemical Ltd., Bombay, and the opinion of Shri Palkivala, the assessee urged that it was engaged in priority industry. The Revenue, however, justified the order of IT authorities. The Tribunal accepted the submissions made on behalf of the respondent-assessee and held that the respondent-assessee was entitled to deductions under Sections 80I and 33(1)(b)(B)(i)(a) of the Act.
3. We have heard Sri A.N. Mahajan, the learned counsel for the Revenue and Sri V.K. Upadhaya, the learned counsel appearing for the respondent-assessee.
4. The question as to whether the plastic manufactured by the respondent-assessee was petro-chemical or not has been considered by the apex Court in the case of J.K. Synthetics Ltd. v. CIT, (1981) 130 ITR 23 (SC) and CIT. v. Nirlon Synthetic Fibres & Chemicals Ltd., (1981) 130 ITR 14 (SC) and it was held that the plastic manufactured by the assessee was petro-chemical within the meaning of Item No. 18 of the Sixth Schedule and was entitled to relief under Section 80I r/w Section 80B(7) of the Act and also the development rebate.
5. Respectfully following the aforesaid decision, we answer both the questions in the affirmative in favour of the respondent-assessee and against the Revenue. However, there shall be no order as to costs.