TMI Blog2002 (11) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... re committed deposits? - we answer the two questions on which notice is issued against the appellant and in favour of the Revenue. - IT Appeal No. 291 of 2002 - - - Dated:- 8-11-2002 - Judge(s) : G. SIVARAJAN., K. BALAKRISHNAN NAIR. JUDGMENT The judgment of the court was delivered by G. SIVARAJAN J.-The question that arises for consideration in this appeal is as to whether the interest income derived by the appellant from the deposit made with the bank for opening letter of credit and other formalities to enable the appellant to export goods to various countries is eligible for the relief under section 80HHC of the Income-tax Act, 1961 (for short "the Act"). The appellant is an individual. He derives income from various sources. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for income-tax for the respondent. At the time of admission notice was ordered on the following two questions: "1. Whether on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the interest amount of Rs. 61,50,722 received on short-term deposit was income from other sources and not business income? 2. Whether there were materials for the Appellate Tribunal to hold that the interest on short-term deposits has to be treated as income from other sources, in view of the fact that the deposits were made at the instance of the bank for opening letters of credit and for keeping margin money and because of which the deposits are committed deposits?" Senior standing counsel appearing for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erchandise. Senior standing counsel submits that the expression "derived" implies that the profit must be on account of the direct result of the export and not in any way connected with the export. Senior standing counsel also relied on the decision of the Supreme Court in Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84. Senior standing counsel submits that admittedly the interest on short-term deposits was not the direct result of any export and, therefore, it is not eligible for the relief under section 80HHC of the Act. We have gone through the decision of the Division Bench of this court in Nanji Topanbhai and Co.'s case [2000] 243 ITR 192. It is seen that the appellant had contended before the Division Bench that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held that so long as the company has no business of lending money, and so long as the admitted case of the company is that the income derived is only on account of the peculiar situation arising from the time schedule for repayment of the loans, it cannot be stated that the income yielded by the deposits or investments was received in the course of the company's business so as to be treated as a business profit. It is on the basis of the decision in Nanji's case [2000] 243 ITR 192 (Ker), counsel appearing for the appellant submitted that if there was evidence regarding the insistence by the bank for fixed deposits for availing the loan, the position would have been different. From the discussion made hereinabove, we are unable to accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chandise. In Cambay Electric Supply Industrial Co. Ltd.'s case [1978] 113 ITR 84 mentioned earlier, the Supreme Court considered the meaning of the expression "attributable to" and observed that the Legislature has deliberately used the expression "attributable to" having a wider import than the expression "derived from". It was further observed that: "It cannot be disputed that the expression 'attributable to' is certainly wider in import than the expression 'derived from'. Had the expression 'derived from' been used, it could have with some force been contended that a balancing charge arising from the sale of old machinery and buildings cannot be regarded as profits and gains derived from the conduct of the business of generation and di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the bank had insisted for making short-term deposits for opening letters of credit and for other facilities, it cannot be said that the income is derived from the export business. That apart, the very question as to whether the income derived from deposits made with the bank is entitled to the relief under section 80HHC was considered by this court in Nanji Topanbhai and Co. v. Asst. CIT [2000] 243 ITR 192; CIT v. Jose Thomas [2002] 253 ITR 553 and also in Abad Enterprises v. CIT [2002] 253 ITR 319 where it was categorically held that such interest income is not entitled to the relief under section 80HHC of the Act. For all these reasons, we answer the two questions on which notice is issued against the appellant and in favour of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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