TMI Blog1996 (5) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... diroor, deals in export business of sea food. The assessment year is 1979-80. On March 27, 1982, the assessment was completed for a total income of Rs. 1,62,910. At this stage, the Income-tax Officer granted deduction of Rs. 35,368 under section 80HH and Rs. 17,226 under section 80J. The Commissioner of Income-tax acting under section 263 of the Income-tax Act, 1961, found that this grant of exemption of the above amounts is erroneous and prejudicial to the interests of the Revenue. He issued notice (annexure "B") for the purpose of action under section 263 of the Act. The basis of the notice (to be found from annexure "B") is that the assessee was not engaged in any industrial activity and consequently, therefore, no deductions were ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the statutory provisions of the above sections of the Act, with special reference to the words "any profits and gains derived from an industrial undertaking", the Tribunal took up the phrase "derived from" as considered by the decision of the Supreme Court in Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84, and observed that the expression "derived from" cannot be understood as the expression "attributable to". It is a term requiring an enquiry into the genealogy of the product and the process of activity to find out the effective source. The Tribunal also referred to the decision of the Privy Council in CIT v. Raja Bahadur Kamakhaya Narayan Singh [1948] 16 ITR 325, to find out as to whether the interest on rent coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . v. CIT [1978] 113 ITR 84, curiously proceeded to observe that there is divergence of judicial opinion between the various High Courts which would justify reference treating the question as a question of law. We find that the statutory provision that the amount in regard to which exemption is sought must be relatable to an industrial undertaking as the amount which could be understood to be "derived from" is more than settled not only by the two decisions of this court, the decision of the Supreme Court in Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 as well as of the Privy Council in CIT v. Raja Bahadur Kamakhaya Narayan Singh [1948] 16 ITR 325. What is on record is only an order of enquiry relating to the aspects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dance to the position before us where except that the exemption was claimed and granted, it was subsequently found to be worthy of reopening, there is no trace of any factual material to ascertain whether the amount can be said to have derived from business activity with reference to the industrial undertaking as is clearly contemplated in the statutory provisions. The factual basis recorded in the decision cited on the basis of the fact findings therein cannot be of any use for the petitioner. For all the above reasons, in our judgment, the question referred is answered in the affirmative, in favour of the Revenue and against the assessee. A copy of this judgment under the seal of the court and the signature of the Registrar shall be f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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