TMI Blog2010 (11) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... R : Mr.T.Ravikumar FOR RESPONDENT : No appearance ORDER J U D G M E N T F.M.IBRAHIM KALIFULLA, J. Though notice was duly served on the respondent by way of substituted service, there is no representation either in person or through counsel. We therefore, proceed to decide the appeals on merits. 2.The substantial questions of law raised in these appeals read as under:- "(1)Whether on the facts and in the circumstances of the case the Appellate Tribunal was right in law in holding that the earning of interest income from Bank deposits will have to be treated as business income ? (2)Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that there was nexus betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted out that inasmuch as the deposits made by the appellant and the interest income earned by it has absolutely no relation to its manufacturing activity of Chimney and Furnace, the said interest income can only be construed as income from other sources and not as income derived from the industrial undertaking. In support of his submission, the learned counsel placed reliance upon the decision of Division Bench of this Court reported in 233 [98] ITR 497, Commissioner of Income tax vs. Pandian Chemicals Ltd. It was also confirmed by the Supreme Court in the decision reported in 262 (2003) ITR 278 [Pandian Chemicals Ltd. vs. CIT] and a recent decision of the Hon'ble Supreme Court reported in 2009 (3) ITR 218 [Liberty India vs. C.I.T.]. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court in the decision of Bacha F. Guzdar v. CIT, [1955] 27 ITR 1. It is clear, therefore, that the words derived from in Section 80-HH of the Income Tax Act, 1961 must be understood as something which has direct or immediate nexus with the appellant s industrial undertaking. Although electricity may be required for the purposes of the industrial undertaking, the deposit required for its supply is a step removed from the business of the industrial undertaking. The derivation of profits on the deposit made with the Electricity Board cannot be said to flow directly from the industrial undertaking itself. The learned counsel appearing on behalf of the appellant has referred to several decisions of the Madras High Court in order to con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofits attributable to industrial undertaking . Hence, incentives profits are not profits derived from the eligible business under Section 80-IB. They belong to the category of ancillary profits of such undertakings." 9.A reading of the above principles laid down by the Hon'ble Supreme Court makes it clear that the expression "derived from" should be given a very strict and restricted meaning. The statement of law as declared by the Hon'ble Supreme Court to the effect that Section 80-I of the Act and similar provisions provide for incentives in the form of deductions which are linked to profits and not investment, makes the position clear that such income which is directly earned from and out of the business viz., as in the case on h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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