TMI Blog2006 (7) TMI 527X X X X Extracts X X X X X X X X Extracts X X X X ..... Mazda Limited, Rs. 32,74,247) for difference of interest received and paid being charged to the profit and loss account whereas as per the assessee the same amount is eligible for deduction under section 80-I. 2. That the ld. CIT(A) is not justified in concurring with the ld. Assessing Officer regarding the upholding of the disallowance of deduction under section 80-I on the difference of interest received and paid by not interpreting the judgments relied upon by the assessee in its true sense and spirits and neither the judgments relied have been distinguished. 3. That the ld. CIT(A) is not justified in upholding the disallowance of deduction under section 80-I on the difference of interest received and paid on the true and correct in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision relied upon in CIT v. Universal Radiators (P.) Ltd. [1981] 128 ITR 531 (Mad.) is also not applicable to the facts of the present appeal by contending that the assessee gave money to sister concern as the Assessing Officer is comparing the case of the assessee with that of the bank. On the issue of perversity, reliance was placed upon certain judicial pronouncements which we will discuss while concluding the issue. On the other hand, the ld. Sr. DR relied upon the decision in Pandian Chemicals Ltd. v. CIT [2003] 262 ITR 278 (SC) by contending that assessee has not come out of this decision and all the facts have been duly considered by the authorities, order is speaking one and argument of the assessee has been duly considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing plea : "Interest income of Rs. 54,70,645 i.e., from SML Rs. 32,74,247 and PSL Rs. 21,96,398 is on account of surplus, business generated funds advanced to group companies. Deployment of excess funds, generated from the business of assessee-company had accrued this interest income and being a business income is eligible for deduction under section 80-I." The ld. Assessing Officer relied upon the decision from Hon ble Apex Court pronounced in the case of CIT v. Sterling Foods [1999] 237 ITR 579 and held that it is essential that there must be nexus and connection between the priority industry and the interest receipts, and thus, not entitled to deduction under section 80-I. Reliance was also placed on the decision of the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rated from business. The word "derived from" cannot have a wide import so as to include any income which can in some manner be attributed to the business. The derivation of the income must be directly connected with the business in the sense that the income is generated by the business, as was concluded by Kerala High Court in the case of CIT v. Cochin Refineries Ltd. [1982] 135 ITR 278 and CIT v. Cement Distributors Ltd. [1994] 208 ITR 355 (Delhi). The word in section 80-I has been used as industrial undertaking. The word industry has a wide import where there is a systematic activity organized by co-operation between employer and employee for the production and/or distribution of goods and services. The major question before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also placed upon the decision of the Tribunal in the case of Asstt. CIT v. Gallium Equipment (P.) Ltd. [2001] 79 ITD 41 Delhi (TM) wherein the assessee-company made FDRs with banks by borrowing funds and against these FDRs bank issued bank guarantees demanded by customers. The assessee claimed for deduction under section 80-I in respect of interest from FDRs which was rejected by the Assessing Officer. The assessee was held to be entitled to relief under section 80-IA with respect to interest relating to such FDRs. The Tribunal has also relied upon the decision pronounced in the case of Pandian Chemicals Ltd. ( supra ). The Chandigarh Bench of the Tribunal in the case of Jt. CIT v. Nucon Switchgears (P.) Ltd. [IT Appeal No. 309 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e during argument also invited our attention to the words "any profits" derived from an industrial undertaking. We are of the view that rules of interpretation would come into play only if there is any doubt with regard to the express language used where the words are unequivocal, there is no scope for importing the rule of liberal interpretation. At the same time, the income so generated must be directly derived from an industrial undertaking. The decision of the Hon ble Apex Court in the case of CIT v. Sterling Foods [1999] 237 ITR 579 2 can be relied upon wherein it was held that it is not merely enough that interest might have been assessed under the head "Profits and gains of business" but it is also essential that there must be n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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