Y.R.Meena, J. - (1.) On an application under Section 256(1) the Tribunal has referred the following question for our opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding the view that the assessee in the present case was eligible for deduction under Section 80HH of the Income-tax Act, 1961, in respect of transport subsidy received by it ?"
(2.) The return was filed on September 30, 1985, disclosing a total income of Rs. 29,98,041. Subsequently, another return was filed on September 30, 1986, in VDIW Scheme disclosing a total income of Rs. 35,56,620. The relevant assessment year is 1985-86 and the year ending is on March 31, 1985. During the course of assessment, the Assessing Officer found that the assessee has claimed the benefit of Section 80HH of the Income-tax Act, 1961, on profits and gains derived from an industrial undertaking which includes the grant of subsidy of Rs. 6,29,871 under the Transport Subsidy Scheme, 1971. The Assessing Officer has considered the submissions on the issue whether the transport subsidy amount is eligible for deduction under Section 80HH. According to the Assessing Officer, the assessee is not entitled for a deduction under Section 80HH of the transport subsidy amount. In appeal before the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax (Appeals), has also dismissed the appeal of the assessee on this ground. In appeal before the Tribunal preferred by the assessee, the Tribunal observed that when contrary views have been taken by different High Courts, the view taken in favour of the assessee should be followed and it allowed the appeal of the assessee on the ground that the transport subsidy amount is eligible for the benefit under Section 80HH of the Act.
(3.) On the question referred learned counsel for the Revenue submits that the deduction under Section 80HH is available only in respect of the profits and gains "derived" from the newly established industrial undertaking and the subsidy amount is not a part of the profit which was derived from the newly established industrial undertaking.;