TMI Blog2013 (9) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... ion only to the profit derived from laying a network of new transmission or distribution lines - Held that:- the harmonious construction of clause (b) and the proviso there under, would be that the deduction u/s 80IA of the Act shall be allowed in respect of the profits derived from transmission or distribution of power through the new network. Had the intention of the parliament was to give deduction only to the undertaking which undertakes the work of laying network of new transmission or distribution lines and not to the undertaking which transmits or distributes the power, then clause (b) would have been worded accordingly and there would have been no necessity to insert a proviso for the said purpose. - Decided in favor of assessee. Deduction u/s 80IA - Interest income - Held that:- There is a difference between "income from business" and "Profits and gains derived from the eligible undertaking". Not all the business income can be classified as "Profits and gains derived from the eligible undertaking" - for application of the words "derived from", there must be a direct nexus between the profits and gains and the undertaking - the nexus of interest income with the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) CIT vs. Dr. V. Gopinathan (248 ITR 449). (c) Tuticorin Alkali Chemicals Fertilizers Ltd. vs. CIT (227 ITR 172). The Ld CIT(A) also confirmed the said decision of the Assessing Officer. Thus the deduction claimed by the assessee u/s 80IA in respect of interest income was rejected by both the authorities. Aggrieved, the assessee has filed this appeal before us. 4. We have heard the rival contentions and perused the record. The controversy in the first issue surrounds around the provisions of sec. 80IA(4)(iv) of the Act. Hence, it is necessary to refer to the said provision and for the sake of convenience, we extract the relevant portions of the same below:- "80IA (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred percent of the profits and gains derived from such business for ten consecutive assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not agree with the view entertained by the assessing officer. However, the Ld CIT(A), by placing reliance to the proviso under clause (b) of sec. 80IA(4)(iv) of the Act, held that the deduction u/s 80IA has to be restricted to the profits derived from laying of such network of new lines of transmission or distribution. Accordingly, the Ld CIT(A) held that the mere distribution of power does not make the assessee to be eligible to claim deduction u/s 80IA of the Act within the meaning of sec. 80IA(4)(iv) of the Act. Since the assessee has claimed deduction u/s 80IA in respect of profit derived from sale of electricity purchased from Kerala State Electricity Board, the Ld CIT(A) also rejected the claim of the assessee. 6. Before us, the Ld D.R supported the view taken by the AO and accordingly contended that the assessee can claim deduction u/s 80IA only if it complies with all the three clauses, viz., Clauses (a), (b) and (c) of sec. 80IA(4)(iv) of the Act. Now the question that arise for our consideration is whether the three clauses enumerated in sub section 4(iv) of section 80-lA are mutually exclusive. In this regard, it is worth referring to the budget speech rendered by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) an undertaking which,---- (a) .......; (b) starts transmission or distribution by laying a network of new transmission or distribution lines at any time during the period beginning on the 1st day of April, 1999 and ending on the 31st day of March, 2009 (amended later as 2011) Provided that the deduction under this section to an undertaking under sub-clause (b) shall be allowed only in relation to the profits derived from laying of such network of new lines for transmission or distribution; A plain reading of clause (b) suggests that an undertaking which starts transmission or distribution by laying a network of new transmission or distribution lines during the time period specified above shall be eligible for deduction u/s 80IA of the Act. However, the confusion starts on reading of the proviso. A plain reading of the proviso suggests that the deduction shall be allowed in relation to the profits derived from laying of such network of new lines for transmission or distribution. 9. For an undertaking, which has started the activity of distribution of power, the expenditure incurred on laying a network of new transmission or distribution lines would be a capital expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its derived from laying of such network of new lines for transmission or distribution. The proviso appears to throttle down the benefit given by the main enactment. 11. At this stage, we feel it pertinent to discuss about the implications of a "proviso" inserted to an enactment. It is a well established rule of construction that a "proviso" cannot enable something to be done which is not to be found in the enacting clause itself, on the ground that otherwise the proviso would be meaningless and senseless (West Derby Union Vs. Metropolitan Life Assurance Society 1897 AC 647). It cannot be used as a lever to force plain words in the enactment to which it is appended, away from their natural meaning (IRC Vs. Johan Daw Staurt Ltd 91950)9 31 TC 274 (HL)). Where the language of the main enactment is clear, a proviso can have no repercussion on its interpretation so as to exclude from it by implication what clearly falls within it terms. (M.S.M. Railway Vs. Bezwada Municipality AIR 1944 PC 71; CIT Vs. Murlidhar Mathurawalla Mahajan Association 91948)(16 ITR 146 (Bom)). 12. In the preceding paragraphs, we have extracted relevant portions from the speech of the Finance Minister and also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... workings made by the assessee. Accordingly, in our view, the workings furnished by the assessee require examination at the end of the assessing officer. Accordingly we set aside this issue relating to examination of the workings furnished by the assessee for claiming deduction u/s 80IA of the Act to the file of the assessing officer with the direction to examine the working furnished by the assessee and take appropriate decision with regard to the quantum of deduction in accordance with the law. 15. The next issue relates to the deduction claimed by the assessee u/s 80IA of the Act in respect of interest income earned from bank deposits and security deposits. Both the tax authorities rejected the said claim made by the assessee. The Ld CIT(A), in this regard, has placed reliance on the decision of Hon'ble Supreme Court in the case of Pandian Chemicals (262 ITR 278) and also on the decision of Hon'ble Punjab Haryana High Court in the case of Nahar Exports Ltd (288 ITR 494). 16. The Ld A.R contended before us that the interest income was earned on the deposits made in the regular course of business. However, the moot point is that the deduction u/s 80IA is allowed in respect of " ..... X X X X Extracts X X X X X X X X Extracts X X X X
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