S.P. Goyal, J. - (1.) THE question referred to us under Section 256(1) of the I.T. Act, 1961 (hereinafter called " the Act "), at the instance of the revenue is as to whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee is entitled to development rebate under Section 33(1)(b)(B)(i) of the Act.
(2.) THE assessee-company was engaged in the manufacture of screws and bolts of various sizes. Though it was incorporated on December 27, 1968, it started the manufacturing of goods only with effect from May 1, 1971. It installed new machinery and plant some time after March 31, 1970, and claimed development rebate at the rate of 25 per cent. alleging that the new plant had been installed for the manufacture of tractor parts which fell under item No. 20 of the list of articles contained in the Fifth Schedule to the I.T. Act. THE ITO found that the assessee was manufacturing only screws of various sizes and the supply of the same was not restricted to the firms manufacturing tractor parts. THE screws manufactured were thus ordinary nuts and bolts which could easily be used in any machinery requiring screws of the same size. Consequently, he allowed development rebate at the rate of 15 per cent. under Section 33(1)(b)(B)(iv)(b) of the Act. On appeal before the AAC, the assessee changed his stand and urged that the plant had been installed by him for the manufacture of automobile ancillaries which fell under item 20 of the said list in Fifth Schedule. The appellate authority, again, held that the machinery set up was not exclusively designed for manufacturing of nuts and bolts only for motor cars and the mere fact that the nuts and bolts were used in the manufacture of automobiles will not entitle the company to its being treated as producing automobile ancillaries. In second appeal, the Tribunal upheld the claim of the assessee to the higher development rebate at the rate of 25 per cent. on the ground that the photostat copy of the certificate dated March 19, 1974, showed that the production of the assessee had been registered by the Government of India as an automobile ancillary. The Tribunal obviously went wrong because the certificate does not show that the production of the assessee had been registered as automobile ancillary and it was only the company. Messrs. Lakshmi Precision Screws Limited, which was registered as an automobile ancillary for obtaining IDA financing. The registration of the assessee-company as an automobile ancillary would not show that it is producing automobile ancillary. The finding of fact recorded by the AAC that the company was not producing any item which could be used only as automobile ancillary was neither challenged nor set aside by the Tribunal. The registration certificate simpliciter, in our view, was not sufficient to hold that the screws manufactured by the company were automobile ancillaries within the said item No. 20 or that the assessee was entitled to the development rebate at the rate of 25 per cent. The question referred to us is consequently answered in the negative, in favour of the revenue and against the assessee. The revenue is also allowed costs of this reference which are assessed at Rs. 250. Bopinder Singh Dhillon, J. I agree.;