JUDGMENT
1. Pursuant to a direction of this court, the Income-tax Appellate Tribunal drew up a statement of the case and referred the following question for the opinion of this court :
"Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the assessee was engaged in a priority industry and was, therefore, entitled to higher rate of development rebate at 35 per cent. ?"
2. The facts, as succinctly stated, are that the assessee purchased a cotton waste plant during the accounting period corresponding to the assessment year 1970-71. It claimed development rebate on it at the rate of 35 per cent. The same was allowed by the Income-tax Officer, but subsequently by an order passed under Section 154 of the Income-tax Act, 1961 (briefly, "the Act"), dated February 26, 1975, he withdrew the development rebate originally granted at the rate of 35 per cent. and instead allowed development rebate at the rate of 20 per cent.
3. On appeal, the Appellate Assistant Commissioner reversed the order of the Income-tax Officer, as in his opinion the cotton waste plant was entitled to development rebate at the rate of 35 per cent.
4. The Department then filed an appeal before the Appellate Tribunal contending that the preferential rate of 35 per cent. could not be applied to a cotton waste plant, for it was not a priority industry in terms of item No. 32 of the Fifth Schedule to the Act. The Tribunal rejected the contention of the Revenue and affirmed the view taken by the Appellate Assistant Commissioner following its earlier decision in Income-tax Reference No. 1150/(A11.) of 1975-76, dated May 18, 1976.
5. Item No. 32 of the Fifth Schedule in the Act is as follows :
"Textiles (including those dyed, printed or otherwise processed) made wholly or mainly of cotton, including cotton yarn, hosiery and rope."
6. The Tribunal, the last fact-finding body, held that the assessee was engaged in the manufacture of cotton yarn, which, in the opinion of the Tribunal, was covered by item No. 32 of the Fifth Schedule. The Tribunal having found that the assessee was engaged in the manufacture of cotton yarn, we are of the opinion that the same is covered by item No. 32 of the Fifth Schedule, inasmuch as the entry clearly states textiles made wholly or mainly of cotton including cotton yarn.
7. For the reasons, we answer the question in the affirmative. The record of this case will be sent down by the Registry within fifteen days from today to enable the Tribunal to pass an order, conformably to our order.