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2013 (11) TMI 739 - HC - Income TaxWhether interest received from the debtors or customers on delayed payment was income derived from the Industrial Undertaking and Deduction under Section 80 HH and 80 I of the I.T.Act – Held that:- Reliance has been placed on the judgment of Hon’ble Gujarat High Court in the case of Nirma Industries Ltd. V. Dy. CIT [2006 (2) TMI 92 - GUJARAT High Court], wherein it was held that when interest is paid on delayed payment, it can be treated as higher sale price which is converse situation to offering of cash discount because the transaction remains the same and there is no distinction as to the source. Looking from this angle, the interest becomes part of the higher sale price and is clearly derived from the sales made and is not divorced therefrom. It is, thus, the direct result of the sale of goods and the income is derived from the Business of industrial undertaking. In the instant case, respondent assessee received interest from trade debtors on outstanding balances. The interest so received is part of contract of sale and thus it is income from industrial undertaking belonging to the respondent assessee. The very source of interest so received is as per terms of contract of sale of goods manufactured in the industrial undertaking. Hence, it is inseparable part of contract of sale. Consequently it forms part of income of the assessee from the industrial undertaking and is thus eligible for deduction under Section 80HH & 80I of the Act – Decided against the Revenue.
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