TMI Blog2001 (8) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961, at Rs. 11,818 only being 20 per cent of Rs. 59,087 i.e., income on interest on deposit with bank it is submitted with respect that the facts and the issue involved in the Ground No. 3 are duly covered as per ratio decided in case of Dy. CIT vs. Jagdish Electronics (P) Ltd. (1998) 66 ITD 542 (Pune) followed in case of Finolex Pipes Ltd. vs. Dy. CIT (2000) 68 TTJ (Pune) 422. As such a due relief may please be granted in this behalf." 2. In terms of notice of hearing sent to the assessee, the assessee filed written submissions and while seeking leave for dispensing with personal hearing, assessee requested for consideration of the written submissions while disposing of the appeal. 3. The relevant facts are that the AO excluded the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 78) 113 ITR 173 (Guj) and Snam Progetti S.P.A. vs. Addl. CIT (1981) 132 ITR 70 (Del) to press its claims. 4. The learned CIT(A) while considering and rejecting the plea of the assessee has concluded in para 6.2 of her order as under: "The appellant s arguments have been considered. It was pointed out to the appellant that the deduction under s. 80-I relates to profits and gains derived from an industrial undertaking. The word derived is of vital significance and it has been interpreted in the Supreme Court s decision in Cambay Electric Supply Industrial Co. Ltd. vs. CIT 1978 CTR (SC) 50 : (1978) 113 ITR 84 (SC) wherein in connection with the computation of deduction allowable under s. 80E, the words used were the profits attributable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tial deduction was allowed out of profits and gains attributable to priority industry. This section was also deleted w.e.f. 1st April, 1973, and the present section was brought on the statute book by Finance (No. 2) Act, 1980, w.e.f. 1st April, 1981. The distinguishing feature of the earlier s. 80-I and the existing one is that earlier the expression profit attributable to priority industry was on the statute book while in the existing provision legislature has used expression any profits and gains derived from industrial undertaking or a ship or from hotel........ . The controversy had since been going on behalf the Courts about the scope and actual meaning of the expression attributable to and derived from and Hon ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sterling Foods vs. CIT (1985) 47 CTR (Kar) 157 : (1984) 150 ITR 292 (Kar) has discussed the expression derived from and observed that expression derived from has a definite but narrow meaning and it cannot receive a flexible or wider concept. 7. To the same effect, Hon ble Madras High Court in the case of CIT vs. Jameel Leather Suppliers (2000) 246 ITR 97 (Mad) has the view in favour of the Revenue. In the case of Ashok Leyland Ltd. vs. CIT (1997) 138 CTR (SC) 287 : (1997) 224 ITR 122 (SC) Hon ble Supreme Court had again reiterated the same view as laid down in the case of Cambay Electric Supply Industrial Co. And while upholding the above view Hon ble Delhi High Court in the case of CIT vs. Cement Distributors (1994) 119 CTR (Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusion, Hon ble Madras High Court has followed the ratio of the above judgment of Pandian Chemicals Ltd. in the case of Fenner (I) Ltd. vs. CIT (2000) 160 CTR (Mad) 141. 10. Further, Hon ble Supreme Court in the case of CIT vs. Sterling Foods (1999) 153 CTR (SC) 439 : (1999) 237 ITR 579 (SC) were again seized with the same expression derived from used in s. 80HH. Their Lordships while considering the decision of the same Court in the case of Cambay Electric Supply Industrial Co. decided the controversy in respect of claim of the assessee under s. 80HH on the profit earned from sale of import entitlements against the assessee after observing at p. 584 as under: "We do not think that the source of the import entitlements can be said to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from" industrial undertaking as there is no direct nexus between the income earned and industrial undertaking and moreover, it is not found that industrial undertaking is immediate and effective source of the said income. Income can be said to be derived from an activity if the said activity is immediate and effective source of the said income. To our mind, even income cannot be said to be derived from an activity merely by reason of the fact that activity may have to earn the said income is an indirect, incidental or remote manner. Since commercial connections are irrelevant and it is also not sufficient even if such income is assessable as business income. Therefore, interest derived from fixed deposits with the bank for availing of ov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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