- (1.) The Income-tax Appellate Tribunal has referred the following question of law under Section 256(1) of the Income-tax, 1961 (hereinafter referred to as "the Act"), relating to the assessment year 1987-88 for opinion to this Court : Whether, on the facts and in the circumstances of the case, the Tribunal was right in law to hold that the activity of purchase and refining of the oil amounted to manufacturing or processing of goods and that the assessee was entitled to deduction under Sections 80HH and 80-I in respect of that activity as well ?
(2.) The brief facts of the case are that the assessee-respondent (hereinafter referred to as "the assessee") firm derived income from the business of extraction of oil from oil seeds and partly of refining oil from oil purchased from the local market. The assessee filed its return of income for the assessment year 1987-88 declaring income of Rs. 4,67,870 and has claimed deduction under Sections 80HH and 80-I of the Act. The assessing authority made an assessment under Section 143(3) of the Act on an income of Rs. 5,32,710. The assessing authority has limited the deduction under Sections 80HH and 80-I of the Act to the activities of extraction of oil from oil seeds but has disallowed the claim relating to the activities of refining the oil from the oil purchased from the market on the ground that the said activity did not amount to manufacture or processing of goods. The Commissioner of Income-tax (Appeals) confirmed the view of the assessing authority. The assessee filed appeal before the Tribunal which was allowed and the direction was issued to the assessing authority to allow necessary relief on the basis of the decision and directions of the Tribunal for the assessment year 1986-87. For the assessment year 1986-87, the assessing authority has made a similar disallowance but in appeal, the Tribunal allowed the claim. The Tribunal held that after purchasing the oil, the same was subjected to the process or treatment and what was sold by the asses-see was not the same thing as originally purchased. For the assessment year 1986-87, the order of the Tribunal has been accepted by the Department inasmuch as no reference was filed. It is alleged that reference was not filed due to the smallness of the amount involved.
(3.) Heard Sri A.N. Mahajan, learned standing counsel appearing on behalf of the Revenue. No one appears on behalf of the assessee.;