Judgment :- N.V. BALASUBRAMANIAN, J. In compliance with the directions of this court, the Tribunal has stated a case and referred the following two common questions of law arising out of the assessment of income of the assessee for the assessment years 1979-80 and 1980-81 for our consideration, "1. 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 relief under sections 80HH and 80J in respect of bus body building activities as there was no material brought on record to show that the conditions of sections 80HH(2)(ii) and section 80J(4)(ii) were not fulfilled by the assessee ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in rejecting the ground raised by the Department that the conditions laid down in section 80HH(2)(ii) and section 80J(4)(ii) were not fulfilled by the assessee on the ground that the same did not arise out of any finding by the Departmental authorities ?" The assessee is a public limited company doing business in tyre retreading, engine reconditioning, and body building for buses. The assessee, during the course of the assessment proceedings for the assessment years 1979-80 and 1980-81, claimed deduction under sections 80HH and 80J of the Income-tax Act, 1961 (for short "the Act"), on the ground that it was an industrial undertaking engaged in manufacturing activities. The Inspecting Assistant Commissioner (Asst.) rejected the claim of the assessee on the ground that the tyre retreading and engine reconditioning operations did not involve any manufacturing activity. In so far as the body building activity is concerned, the Inspecting Assistant Commissioner rejected the assessee's claim for deduction under section 80HH on the ground that there were no separate accounts maintained by the assessee for the bus body building division and the assessee was not entitled to any deduction under section 80J as well as under section 80HH of the ActThe assessee took up the matter in appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) rejected the claim of the assessee for relief under section 80J as well as section 80HH of the Act in so far as the tyre retreading and engine reconditioning activities were concerned, but he accepted the claim of the assessee for the relief in regard to bus body building activity. The Commissioner of Income-tax (Appeals) rejected the claim of the assessee for relief under section 80J as well as section 80HH of the Act in so far as the tyre retreading and engine reconditioning activities were concerned, but he accepted the claim of the assessee for the relief in regard to bus body building activity. The view of the Commissioner of Income-tax (Appeals) was that even if the assessee did not maintain separate accounts in regard to the particular division for the bus body building, the assessee would be entitled to relief under sections 80J and 80HH of the Act on proportionate profits attributable to such activity, which could be arrived at on an estimate basis. The Department has challenged the order of the Commissioner of Income-tax (Appeals) before the Income-tax Appellate Tribunal. The grounds raised by the Revenue before the Tribunal was that the assessee did not satisfy the conditions laid down in section 80HH(2)(iii) and section 80J(4)(ii) of the Act and, therefore, the assessee was not eligible for deduction under both the sections. The case of the Revenue was that the assessee started the unit with old machinery and, therefore, the unit did not satisfy the conditions mentioned in both the sections. The Tribunal rejected the case of the Revenue holding that the Inspecting Assistant Commissioner rejected the claim of the assessee only on the ground that the separate accounts were not maintained for bus body building activity. The Commissioner of Income-tax (Appeals) has not considered the question of fulfilment of the requirements of sections 80J(4)(ii) and 80HH(2)(iii) of the Act and the Revenue has also not produced any material before the Tribunal to show that the conditions prescribed in the two sections were not fulfilled by the assessee and in the absence of any material, the Tribunal held that the Revenue cannot be said to be aggrieved by the finding of the Commissioner of Income-tax (Appeals) on the points sought to be agitated. In this view of the matter, the Income-tax Appellate Tribunal dismissed the appeal preferred by the Revenue. In this view of the matter, the Income-tax Appellate Tribunal dismissed the appeal preferred by the Revenue. The Appellate Tribunal has stated a case and referred the two questions of law set out aboveLearned counsel for the Revenue submitted that the Income-tax Officer rejected the claim of the assessee on the ground that the assessee was not maintaining separate books of account for the bus body building activity and there was no occasion for him to consider whether the assessee had fulfilled the requirements of sections 80HH(2)(iii) and 80J(4)(ii) of the Act and, hence, a ground was raised before the Appellate Tribunal that the assessee had not fulfilled the conditions prescribed for the said sub-sections of sections 80J and 80HH of the Act, and the Tribunal was not justified in refusing to entertain the claim of the Revenue. We have carefully considered the submissions of learned counsel for the Revenue. It is, no doubt, true that the Inspecting Assistant Commissioner rejected the claim of the assessee by holding that the assessee was not entitled to the deduction both under section 80J and section 80HH of the Act on the ground that the assessee was not maintaining separate books of account in respect of the bus body building activities. The order of the Inspecting Assistant Commissioner proceeds on the basis that the assessee was not eligible for deduction under sections 80J and 80HH of the Act for the lapse on the part of the assessee in maintaining separate books of account in respect of the bus body building activities, and there is no express finding that the assessee had not satisfied the other conditions of sections 801 and 80HH of the Act, nor is it possible to imply such a finding. In the appeal preferred before the Commissioner of Income-tax (Appeals), though none represented the Department, the Commissioner of Income-tax (Appeals) considered the case and held that the assessee was entitled to deduction under sections 80J and 80HH of the Act. The Revenue has raised for the first time before the Tribunal that the assessee had not fulfilled the requirements prescribed under sections 80HH(2)(iii) and 80J(4)(ii) of the Act, but the Revenue has not produced any material before the Tribunal to point out that the conditions under sections were not fulfilled by the assessee. The Revenue has raised for the first time before the Tribunal that the assessee had not fulfilled the requirements prescribed under sections 80HH(2)(iii) and 80J(4)(ii) of the Act, but the Revenue has not produced any material before the Tribunal to point out that the conditions under sections were not fulfilled by the assessee. Though, it is true, it can be said that the entire assessment was before the Appellate Tribunal when it hears the appeal preferred against the order of the assessment yet, still it has the discretion to entertain a new plea raised either by the Revenue or by the assessee. The Tribunal, if satisfied, may entertain the new plea and remit the matter for consideration. But, the Revenue should establish with records that either the Assessing Officer had not considered the question or there was a violation of the conditions of sections 80J and 80HH of the Act before the TribunalThe Tribunal, in the instant case, found that there were no materials produced by the Revenue in respect of its plea that the assessee had not fulfilled the requirements found in sections 80HH and 80J of the Act and in the absence of any material before the Tribunal, the Tribunal bid exercised its discretion not to entertain the new plea put forward by the Revenue before the Tribunal. We are of the opinion that it cannot be said that the Tribunal had exercised the discretion arbitrarily or unreasonably and on finding that there are no materials produced by the Revenue to support its plea, the Tribunal had exercised its discretion not to entertain the new plea. We are of the view that it is a case of exercise of the discretion of the Appellate Tribunal to entertain the new plea raised by the Revenue, and this court sitting in reference jurisdiction will not interfere with such a discretion unless it is established that the discretion was not exercised properly or was exercised capriciously. Since the Tribunal has exercised the discretion properly, we are not inclined to interfere with the order of the Tribunal rejecting the request of the Revenue to entertain the new plea raised by it. Therefore, we are of the opinion that the order of the Appellate Tribunal is justifiable in law and, accordingly, we answer both the questions of law raised before us in the affirmative and against the Revenue. Therefore, we are of the opinion that the order of the Appellate Tribunal is justifiable in law and, accordingly, we answer both the questions of law raised before us in the affirmative and against the Revenue. The assessee will be entitled to costs of a sum of Rs. 1, 000.