Pathak, J. - (1.) The delay in filing the special leave petition is condoned. Having regard to the questions raised by the special leave petition, special leave to appeal is granted.
(2.) The appellant is a limited company engaged in the manufacture of Nylon-6 yam from imported caprolactum. In assessment proceedings under the Income Tax Act, 1961 for the assessment year 1968-69, the appellant claimed that Nylon-6 was an article covered by item 18 of the Fifth and Sixth Schedules of the Act and, therefore, it was entitled to development rebate at 35% under Section 33 (1) (b) (B) (i) (a) and for deduction, in terms of S. 80-1, from the profits and gains attributable to a priority industry. The appellant claimed that Nylon-6 fell within the scope of the Entry: "Petrochemicals including corresponding products manufactured from other basic raw materials like calcium carbide, ethyl alcohol or hydro-carbons from other sources." The claim was allowed by the Income-tax Officer. When completing the assessment for the assessment year 1970-71 the Income-tax Officer took a different view of the claim, and referred the case to the Additional Commissioner of Income-tax under S. 263 of the Act. Thus apprised, the Additional Commissioner invoked his revisional powers in respect of the assessment order for the assessment year 1968-69, and notwithstanding the evidentiary material placed before him by the appellant rejected the claim of the appellant, holding that the manufacture of Nylon-6 was not covered by the Entry.
(3.) The appellant appealed to the Income-tax Appellate Tribunal. The Appellate Tribunal allowed the appeal and inter alia found that Nylon-6 produced by the appellant qualified as a "Petrochemical". The Commissioner of Income-tax applied to the Appellate Tribunal for a reference to the High Court but the reference application was rejected on the ground that no question of law arose in the matter.;