Prakash Krishna, J. - (1.) The Tribunal, Delhi, at the instance of the assessee has referred the following question of law under Section 256(1) of the IT Act, 1961 (hereinafter referred to as 'the Act'), for opinion to this Court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that it was obligatory for the assessee to have machinery and plant and that it had failed to establish that it had installed machinery and plant for the purposes of the business of the undertaking within the meaning of Clause (2) of the Explanation below Sub-section (2) of Section 32A of the IT Act, 1961 ?" '
(2.) The asst. yr. 1979-80 is involved in the present reference. The assessee is an exporter and is engaged in the business of brass art wares consisting of bell sets, wind chimes, iron bells, candle stands, etc. It claimed itself as manufacturer of these items. The claim of the assessee for weighted deduction under Section 35B of the Act on a total expenditure of Rs. 1,60,248 was disallowed by the ITO. According to the assessee, it is as small scale exporter and is entitled to the benefit under Section 35B(1A). Section 35B was amended by insertion of Section 35B(1A) by the Finance Act, 1978, w.e.f 1st of April, 1978, and was omitted w.e.f. 1st of April, 1980. The ITO found that the assessee was neither small scale exporter nor its activities with regard it to be a manufacturer. The CIT(A), in appeal, also did not agree with the assessee and found that the assessee did not own any machinery for manufacturing and that all the activities were got done from outside. In further appeal by the assessee, the Tribunal came to the conclusion that the assessee has failed to place before it any material to establish that it had installed machinery and plant in the assessment year in question, for the purposes of its business within the meaning of Clause (2) of the Explanation below Sub-section (2) of Section 32A. The Tribunal did not accept the contention of the assessee that it was not obligatory for the assessee to have any machinery and plant and that what was required was that if the assessee had installed a machinery and plant, its aggregate value on the last date of the previous year, for the purposes of business of the undertaking did not exceed Rs. 10,000.
(3.) Heard Shri Vikram Gulati, the learned Counsel for the assessee, in support of the reference and Shri A.N. Mahajan, the learned standing counsel for the Revenue.;