TMI Blog1999 (6) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... n the facts and in the circumstances of the case, the Tribunal was right in holding that the interest paid under section 220(2) of the Act is not an allowable deduction against the profits of the applicant company ?" The assessee is a domestic company in which the public are substantially interested. The assessee-company is carrying on business in the manufacture and sale of V belts, oil seals, O rings and rubber moulded products, etc. The assessee claimed relief under section 80HH of the Income-tax Act and also with regard to the interest paid under section 220(2) of the Act. The Income-tax Officer negatived the relief sought for by the assessee. The Commissioner of Income-tax had taken the view that the cash assistance received from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in ; show the origin or formation of. The use of the words 'derived from' in item 11AA(2) suggests that the original source of the product has to be found. Thus, as a matter of plain English, when it is said that one word is derived from another, often in another language, what is meant is that the source of that word is another word, often in another language. That is the ordinary meaning of the words 'derived from' and there is no reason to depart from that ordinary meaning here." Counsel for the assessee argued that by use of the words "derived from" the original source of the product has to be found and the original source is the production of goods and by taking into account the original source, it can be concluded that the assista ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the Supreme Court decision, the words "derived from" suggest that the original source of the product has to be found and so, this cash assistance or export subsidy is traceable to the origin of the industrial undertaking and it clearly comes under section 80HH. The decision reported in National Organic Chemical Industries Ltd. v. Collector of Central Excise, AIR 1997 SC 690 ; [1997] 2 SCC 587, relates to the Central Excises and Salt Act, 1944, and the use of the words "derived from" related to item 11-AA(2) under that Act and it was held that the words "derived from" suggest that the original source of the product has to be found. The wording "derived from" cannot be attributed to the original source of the product to the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Legislature wanted to give a restricted meaning for section 80HH and so, it has used the expression "derived from". So, the expression "derived from" used in section 80HH implies that section 80HH is confined only to profits and gains derived from the industrial undertaking. So, the cash assistance received from the Government for export does not come under section 80HH of the Act in view of the decision of the Supreme Court reported in Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 with regard to the expression "derived from". So, the cash assistance given only for export cannot be treated as profit or gain derived from the industrial undertaking for the purpose of section 80HH of the Act. It has nothing to do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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