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2015 (5) TMI 1244 - AT - Income TaxRevision u/s 263 - deduction under sec.80IA - Scope of meaning of the word “derive” - interest income earned from deposits - whether the interest income earned by the assessee on the fixed deposits is business income derived from the industrial undertaking or it is an income from other sources? - HELD THAT:- In the case of Pandian Chemicals [2003 (4) TMI 3 - SUPREME COURT] the meaning of words “derived from” was again considered and after relying on the judgment of Cambay Electric Supply Industrial Co. Ltd.[1978 (4) TMI 1 - SUPREME COURT] it was held that the expression “derived from” had a narrower connotation than the expression “attributable to”. After having considered the meaning of the words “derived from”, as per the various decisions of Supreme Court, in our opinion, the interest earned by the assessee from deposits made in trust and retention account maintained under the financing agreement with the lenders, cannot be considered as profits and gains of business derived from the industrial undertaking. Thus, we find no infirmity in the order of the Commissioner(Appeals) in following the judgment of the Supreme Court in the case of Pandian Chemicals Ltd. (supra). DR was of the opinion that benefit of netting of interest cannot be allowed in this case, as the interest paid and interest received do not partake the same character, as held by the Supreme Court in the case of CIT v. Keshavji & Ravji [1990 (2) TMI 1 - SUPREME COURT] and CIT v. V. Chinnapandi [2006 (1) TMI 65 - MADRAS HIGH COURT]. Therefore, no benefit of netting of interest is allowed. Accordingly, this ground is dismissed in both the appeals. Invoking the provisions of sec.263 so as to withdraw deduction given to the assessee, after considering the interest income received from fixed deposits made with the trust and arising from trust and retention account required to be made with the intention to service debt under financing agreement as business income - The issue regarding treating the interest income earned from deposits and retention account made under financing agreement is to be considered as income from other sources. As such, the order of the Assessing Officer suffered from infirmity, which is prejudicial to the interests of the Revenue. Hence, the Commissioner of Income-tax is justified in invoking the jurisdiction under sec.263 of the Act stating that the said interest is to be considered as business income. As we have already held in earlier years that the said interest income is to be considered as income from other sources, the assessee fails on this ground also.
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