Satish Chandra, C.J.
1. M/s. Farrukhabad Electric Supply Company, the assessee, is a 'Priority Industry' within the meaning of Section 80B(7) of the I.T. Act, 1961. It claimed that it is entitled to a deduction from its income at the rate of 8% of its profits and gains attributable to its activities as a 'priority industry'. The ITO accepted the statement, except in respect of a sum of Rs. 46,320 which was the income of the assessec under Section 41(2) of the Act in relation to the sale of machineries pertaining to its business as priority industry. This view was accepted by the AAC. On appeal, the Tribunal reversed the view. It held that the assets sold, in respect of which the income under Section 41(2) was computed, were part of the assessee's plant and machinery used in the activities of generating electricity and so the income could not but be attributed to the profits and gains of the assessee's business as a priority industry.
2. At the instance of the CIT, the Tribunal referred the following question of law for our opinion :
'Whether, on the facts and in the circumstances of, the case, the Tribunal's view that the machinery of plant sold in respect of which income under Section 41(2) is computed, is attributable to the profits and gains of the assessee's business as a priority industry is correct in law ?'
3. The relevant phrase is 'profits and gains attributable to the assessee's business as specified industry'. This phrase in Section 80E(1) was interpreted in Cambay Electric Supply Industrial Co. Ltd. v. CIT : 113ITR84(SC) . The Supreme Court held that the expression 'attributable to' is different from the expression 'derived from'. The expression 'attributable to' is wider in import. It includes within its ambit the balancing charge arising from the sale of old machinery and part of any such amount is to be regarded as profits and gains attributable to the business of the priority industry. In this view, the view taken by the Tribunal is upheld.
4. We, therefore, answer the question referred to us in the affirmative, in favour of the assessee and against the department. As no one appeared on behalf of the assessee, there will be no order as to costs.