Rajes Kumar, J. - (1.) At the instance of the Revenue, the Income Tax Appellate Tribunal, New Delhi has referred the following question of law under Section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") relating to the Assessment Year 1982-83 for opinion to this Court. "Whether on the facts and in the circumstances of the case, the Tribunal was in law justified in holding that the assessee company is entitled to deduction under Section 80HHA of the Income-tax Act, 1961 in respect of duty draw back?"
(2.) Briefly stated the facts giving rise of the present Reference are as follows.
(3.) The assessee-opposite party (hereinafter referred to as "the assessee") enjoys income from purchase and sale of industrial mentha oil in the head office set and manufacture and sale of basic drugs in the branch set. The assessee claimed deduction under Section 80HHA of the Act. The income-tax Officer held that the assessee company fulfilled the conditions for allow-ability of the claim under Section 80HHA of the Act in respect of its pharmaceutical Division. In other words, he accepted that the assessee was an industrial undertaking as referred to in Section 80HHA of the Act. He further noted that the words used in Section 80HHA of the Act are "'derived from and not attributable to". According to him the meaning of term derived in narrower than the meaning of the term attributable to. Therefore, deduction under Section 80HHA of the Act was available on the actual profit of the industrial activities of the industrial undertaking and not from any incentive received from the Government because the Government wanted to boost certain industrial activities within the State. One such incentive was the duty draw back, which was included in the total income of the assessee for the assessment year under consideration. The Income-tax Officer did not allow the deduction under Section 80HHA of the Act with reference to such profits, as the same were not derived from the industrial activity. On appeal, the Commissioner of Income Tax allowed the claim of the assessee.;