Judgment :- N.V. BALASUBRAMANIAN, J. At interesting question of law on the interpretation of Explanation to s. 35B of the IT Act, 1961 (hereinafter to be referred to as 'the Act') defining the expression, 'small scale industrial undertaking' arises on the facts of the case. 2. The ITO while completing the assessment for the asst. yr. 1979-80 granted weighted deduction of a sum of Rs. 90, 873 under the provisions of s. 35B of the Act. The CIT perused the records of assessment of the assessee and he was of the prima facie opinion that the assessee was not eligible for weighted deduction under s. 35B of the Act. According to the CIT, the assessee was not a holder of an export house certificate and the assessee was also not a 'small scale exporter'. After hearing the assessee, the CIT found that the plant and machinery installed in the assessee's premises on the last day of the previous year viz., 31st March, 1979 were as under : Name of the Gross block as at 31st machinery March, 1979 (Rs.) 1. Plant and machinery 7, 19, 894 2. Electric equipments 90, 304 3. Library 4, 735 4. Patterns 5, 776 5. Generators 1, 72, 234 6. Tractors 10, 600 7. Furnace 258 10, 03, 801 There is no dispute that the assessee was not a holder of an export house certificate. The CIT held that the assessee is not a small scale industrial undertaking as its aggregate value of the machinery and plant installed on the last day of the previous year exceeded ten lakh rupees. The CIT, therefore, held that the assessee cannot be treated as a small scale industrial undertaking and the weighted deduction under s. 35B of the Act was not available to the assessee. The CIT, therefore, directed the ITO to withdraw the weighted deduction and complete the assessment. 3. The assessee preferred an appeal before the Tribunal against the order of the CIT. Before the Tribunal, there was a dispute whether the library, patterns, generators and tractors can be regarded as plants and machinery for the purpose of Explanation to s. 35B of the Act. The Tribunal held that the patterns are plants of the industrial undertaking and generators are parts of the plant and they cannot be excluded. Before the Tribunal, there was a dispute whether the library, patterns, generators and tractors can be regarded as plants and machinery for the purpose of Explanation to s. 35B of the Act. The Tribunal held that the patterns are plants of the industrial undertaking and generators are parts of the plant and they cannot be excluded. The view of the Tribunal was that only four items, namely, tools, jigs, dies and moulds have been excluded from the Explanation to sub-s. (2) of s. 32A of the Act and all other items of machineries and plants should be considered and, therefore, the generator is not excluded. The Tribunal also held that the tractors were installed and the value of the tractors was liable to be included in the aggregate value of the assets. The Tribunal, therefore, held that the assessee was not a small scale industrial undertaking within the meaning of cl. (2) of the Explanation to s. 32A(2) of the Act and in this view of the matter, upheld the order of the CIT. 4. The assessee aggrieved by the order of the Tribunal sought for a reference and the Tribunal has stated a case and referred the following question of law for our consideration : "Whether the Tribunal was right in holding that the tractors, generators and patterns are to be included as forming part of plant and machinery in computing the total investment in the undertaking and that therefore, the assessee is not a small scale exporter for the purpose of s. 35B of the IT Act, 1961 ?" 5. The question, as we have already indicated, is purely a question of law. Sec. 35B of the Act grants export market development allowance. In s. 35B of the Act, a sub-s. (1A) was introduced by the Finance Act, 1978 w.e.f. 1st April, 1978 and that sub-section was subsequent deleted by the Finance Act, 1979 w.e.f. 1st April, 1980. Sec. 35B(1A) was in operation during the asst. yr. 1979-80 the year under consideration. Sec. 35B(1A) of the Act prohibits the grant of weighted deduction and it also engrafts an exemption if the assessee is a small scale exporter or a holder of export house certificate engaged in the business of export of goods. Sec. 35B(1A) was in operation during the asst. yr. 1979-80 the year under consideration. Sec. 35B(1A) of the Act prohibits the grant of weighted deduction and it also engrafts an exemption if the assessee is a small scale exporter or a holder of export house certificate engaged in the business of export of goods. The expression, 'small-scale exporter' is defined in the Explanation to s. 35B(1A) of the Act to mean a person who exports goods manufactured or produced in any small-scale industrial undertaking or undertakings owned by him, provided that such person does not own any industrial undertaking which is not a small-scale industrial undertaking. The expression, 'small-scale industrial undertaking' is defined in cl. (d) of Explanation which reads as under : "Small-scale industrial undertaking has the meaning assigned to it in cl. (2) of the Explanation below sub-s. (2) of s. 35A" . Clause (2) of the Explanation to s. 32A(2) of the Act defines the expression, 'small-scale industrial undertaking' as under : "an industrial undertaking shall be deemed to be a small-scale industrial undertaking, if the aggregate value of the machinery and plant (other than tools, jigs, dies, and moulds) installed, as on the last day of the previous year, for the purposes of the business of the undertaking does not exceed - (i) in a case where the previous year ends before the 1st day of August, 1980, ten lakh rupees; (ii) in a case where the previous year ends after the 31st day of July, 1980, but before the 18th day of March, 1985, twenty lakh rupees; and (iii) in a case where the previous year ends after the 17th day of March, 1985, thirty-five lakh rupees, and for this purpose the value of any machinery or plant shall be - (a) in the case of any machinery or plant owned by the assessee, the actual cost thereof to the assessee; and (b) in the case of any machinery or plant hired by the assessee, the actual cost thereof as in the case of the owner of such machinery or plant" . 6. The assessee admittedly is not a holder of export house certificate and the claim of the assessee is that it is a small-scale exporter. The CIT has not held that the assessee had not complied with other requirements of Explanation to s. 35B of the Act. 6. The assessee admittedly is not a holder of export house certificate and the claim of the assessee is that it is a small-scale exporter. The CIT has not held that the assessee had not complied with other requirements of Explanation to s. 35B of the Act. The CIT held that the aggregate value of the machineries or plant exceeded ten lakh rupees and so, the assessee was not a small-scale exporter. There is dispute that with reference to four items noticed as the machineries, namely, library, patterns, generators and tractors and it is obvious that if the value of anyone of the items is excluded from the aggregate value of the plant and machinery, then the assessee would be regarded as a small-scale exporter. There is no dispute that the goods exported were manufactured in the industrial undertaking owned by the assessee and the only question is whether the undertaking can be regarded as a small-scale industrial undertaking. 7. The Tribunal held that only four items, namely, tools, jigs, dies and moulds should be excluded in computing the aggregating value of the machinery and plant and all other machinery and plants should be taken into account in determining the value exceeding 10 lakh rupees. The same contention was also urged by the learned counsel for the Revenue before us by stating that s. 35B(1A) of the Act refers to cl. (2) of Explanation to s. 32A(2) of the Act and all the machinery and plants belonging to the assessee, except the four items expressly referred to in Explanation to s. 32A of the Act should be taken into account and the value of the machinery or plant on which investment allowance is not allowable should also figure in total value of the machinery or plant to determine whether the undertaking is a small-scale industrial undertaking or not. We are not able to accept the contention of the learned counsel for the Revenue. Under the scheme of investment allowance under s. 32A of the Act, investment allowance is not allowed, inter alia, on any office appliance or any road transport vehicle and other items of machinery or plant expressly mentioned in s. 32A. When cl. (2) of the Explanation below s. 32A(2) refers to the machinery or plant, it refers to the machinery or plant on which investment allowance is allowable under the Act. When cl. (2) of the Explanation below s. 32A(2) refers to the machinery or plant, it refers to the machinery or plant on which investment allowance is allowable under the Act. Once certain machineries or plants go out and are not eligible for the grant of investment allowance, the reference to plant and machinery in Explanation to s. 32A would refer to the other items of plant and machinery eligible for investment allowance. In our opinion, the Explanation to s. 32A(2) of the Act has to be read in the scheme and setting of the grant of investment allowance and it cannot be construed de hors the scheme or the context in which the said Explanation appears. In our view, the Explanation to s. 32A(2) would refer only to those plant and machineries on which investment allowance is allowable and in the context of the Explanation, it can only mean those machineries or plants which are eligible for the grant of investment allowance and used for the purpose of business of manufacture or production of the articles and things. Further, the exclusion of certain items like tools, jigs, dies and moulds in the Explanation to s. 32A also gives a clue that the machinery or plant should be of such a nature of which investment allowance is granted. That apart, the term 'installed' in the said Explanation also gives an indication that the machinery or plant should be installed and they must be of the nature on which investment allowance is allowable under s. 32A of the Act. In other words, in our opinion, the Explanation excludes from its scope and ambit certain machineries or plants on which investment allowance is not allowed under the proviso to s. 32A of the Act and it is only with reference to other machinery or plants which are installed other than tools, jigs, dies and moulds, the aggregate value has to be determined to decide the question whether the industrial undertaking can be regarded as a small-scale industrial undertaking or not. We are of the view that the Explanation cannot be read in isolation or de hors the scheme of the grant of investment allowance. We are of the view that the Explanation cannot be read in isolation or de hors the scheme of the grant of investment allowance. The Explanation has to be read in the setting in which it appears and in the context of Explanation, we are of the opinion that those items on which investment allowance is not allowed should be altogether excluded to determine the aggregate value of the plant and machinery for the purpose of deciding the controversy whether an undertaking can be regarded as a small-scale industrial undertaking or not. Further, it is not possible to pick out only the cl. (2) of Explanation to s. 32A(2) and engraft the same as a part of s. 35B of the Act. The legislature has referred to the small-scale industrial undertaking in the context of s. 32A of the Act and the reading of the Explanation in isolation of the other provisions of the s. 32A would disturb the meaning and would defeat the object of encouraging export by small-scale exporters. Consequently, the view of the Tribunal that only the value of tools, jigs, dies and moulds should alone be excluded from the computation of the total value of machineries or plants is not sustainable. 8. The Bombay High Court in the case of CIT vs. Reunion Engineering Co. (P) Ltd., and the Kerala High Court in the case of CIT vs. Travancore Mats & Mattings Co. 1997 (142) CTR(Ker) 445 : 1997 (229) ITR 93 (Ker) have taken the same view. Though the decision of the Bombay High Court is with reference to the Explanation (3) to s. 32(1)(vi) of the Act, the reasoning of the Bombay High Court that the Explanation appended to section has no independent existence and there must be a co-joint reading of the Explanation along with the main provision and if so read, the expression, 'machinery and plant' would exclude office appliances and road transport vehicles would equally apply to the provisions of s. 32A(2) of the Act. The situation present in the instant case did arise before the Kerala High Court and the Kerala High Court also has taken a view that under the definition of small-scale industrial undertaking, recourse to s. 43(3) would not be necessary and the expression, 'machinery and plant' has to be understood in the context of the statutory provisions of s. 32A and s. 35B of the Act. We are in complete agreement with the views expressed by the Bombay High Court as well as the Kerala High Court. The Tribunal, however, has not determined whether any of the four items namely, library, patterns, generators and tractors would fall within the scope of proviso to s. 32A(1) of the Act. Though learned counsel for the assessee would contend that the tractor is a road transport vehicle, in the absence of any finding by the Tribunal on the question, we are of the view that the Tribunal should go into the question whether any of the items would fall within the proviso to s. 32A(1) of the Act and if any of the items falls within the proviso to s. 32A(1) , its value should be excluded from the total aggregate value of the machinery or plant. 9. In the view we have taken, it is not necessary to consider the decision of this Court in the case of Sundaram Motors Pvt. Ltd. vs. CIT, wherein the expression, 'installed' was construed by this Court. So also, we are not concerned with the decisions of the Supreme Court in the case of Scientific Engineering House P. Ltd. vs. CIT, and in the case of CIT vs. Elecon Engineering Co. Ltd., wherein the expression 'plant' was construed to mean drawings and patterns. We hold that the view of the Tribunal that only four items viz., tools, dies, jigs and moulds should be excluded is not sustainable in law. 10. The question of law referred to us does not bring out the real question and we reframe the question as under : "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is not a small-scale industrial undertaking within the meaning of cl. (2) of Explanation below sub-s. (2) of s. 32A of the IT Act, 1961 ?" In the view we have taken, we are not answering the question of law as reframed by us, but we return the reference unanswered coupled with a direction that the Tribunal should hear the appeal in the light of the directions stated above. The assessee is entitled to costs of a sum of Rs. 1000.