TMI Blog1993 (8) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act in the assessment for the year 1971-72 took the gross total income after setting off the depreciation of the current year and the unabsorbed depreciation of the earlier year. The income coming under "interest on securities" was excluded from the "gross total income" so computed for the purpose of determining section 80-1 relief. The Appellate Assistant Commissioner upheld the computation made by the Income-tax Officer for the purpose of the relief under section 80-1 of the Act. The order of the Appellate Tribunal also consists of the computation of the relief under section 801 but in this case, we are not concerned with that portion of the order. The Income-tax Appellate Tribunal held that the interest received on the deposits made by the assessee with the Electricity Board should not be deducted from the gross total income while computing the relief admissible under section 80-1. The assessee has received certain sums by way of interest on the deposits made with the Electricity Board. The assessee is a priority industry engaged in manufacture, and is classified as a priority industry. It is contended on behalf of the Revenue that section 80-I does not take in its fold the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to any priority industry, there shall be allowed, in accordance with and subject to the provisions of this section, a deduction from such profits and gains of an amount equal to eight per cent. thereof, in computing the total income of the company." The sub-sections (2) and (3) of section 80-I are not necessary for our purpose, hence they are not reproduced. The topic covered by the present section 80-I(1) was covered by section 80E(1) which was inserted by the Finance Act, 1966, with effect from April 1, 1966. Section 80E was deleted by the Finance (No. 2) Act, 1967, with effect from April 1, 1968, and in its place section 80-1 was introduced. Section 80E also contained the words "where the total income ( .... ) includes any profits and gains attributable to the business of generation or distribution of electricity. . . . " The present section 80-I(1) also contains the words "profits and gains attributable to any priority industry". Here it is relevant to refer to the dictionary meaning of the word "attribute" as contained in The Concise Oxford Dictionary, the new edition for the 1990s. One of the meanings of the word "attribute" is "regard as belonging or appropriate to". The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment rebate should not have been excluded, and that if proper calculations as suggested by him were made, the assessee was not entitled to any deduction. In the appeal, the Income-tax Tribunal, regarding the item of Rs. 7,55,807 held that the said item of profits could not be treated in isolation or divorced from the profits and gains of the business of generation and distribution of electricity done by the assessee-company and that the said item will have to be regarded as profits "attributable to" though not "derived from" the business of generation and distribution of electricity and, as such, the said item was exigible to the deduction of eight per cent. under section 80E(1) of the Act. At this stage itself we may point out that section 80E(1) of the Act considered in the Supreme Court case as already pointed out is the present section 80-1, with which we are concerned. The High Court (see [1976] 104 ITR 744 (Guj)) also took the same view. Ultimately, when the matter was carried to the Supreme Court while interpreting the words contained in section 80E(1) as to the phrase "profits and gains attributable to the business of generation or distribution of electricity" the Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard and that power supply cannot be made without the deposit being made with the Electricity Board. No doubt, on the deposit the Electricity Board gives interest and that interest is taken as an income from the priority industry. As such, it is not possible to hold that the income drawn on the deposit made by the priority industry is totally unconnected with the business of the priority industry. As long as the deposit is necessary for the purpose of running the priority industry, such deposit cannot be held to be unconnected with the business of the priority industry. Consequently, the income by way of interest drawn on such deposit cannot also be held to be not attributable to or not connected with the priority industry. Because also of the fact that it can very well be regarded as belonging or appropriate to the priority industry. However, it is contended by learned counsel for the Revenue that the decision in Cambay Electric Supply Industrial Co. Ltd.'s case [1978] 113 ITR 84 (SC) has been considered by a Division Bench of this court in CIT v. Universal Radiators P. Ltd. [1981] 128 ITR 531. It is held therein that the view taken by a Division Bench of this court in Addl. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to this in Universal Radiators P. Ltd.'s case [1981] 128 ITR 531 (Mad), it was also held after referring to the decision in Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (SC). Thus (at page 536): "It is clear from the passage given above that the term 'attributable to' is wider than the term 'derived from'. We have thus to find out whether the profit is ascribable to the running of the priority industry. There is nothing in the provision which requires that the assessee alone should run the priority industry. It may be that on account of business exigencies the assessee, instead of directly running the factory, may lease it to another and purchase the end product. So long as the end product is manufactured in the factory, the manner in which the business is carried on is not really material. The assessee may run the industry himself or may have it run by another. He may appoint a manager, for instance, and run the business. He may lease it out. So long as the factory manufactures the products coming within the list of articles and things in the Sixth Schedule, the assessee would be eligible for the relief under section 80-1 of the Act, as the profits derived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,09,492 and interest received by the assessee excluding interest received on bank deposits were entitled to be included for computing the deduction under section 80-1 of the Income-tax Act, 1961, on the basis of the decision of the Supreme Court in Cambay Electric Supply Industrial Co. Ltd.'s case [1978] 113 ITR 84. Therefore, we are of the view that the income derived by way of interest on the deposit made by the assessee with the Electricity Board for the purpose of supply of electricity without which the priority industry of the assessee in question could not have been run, was an income connected with the business and production of the priority industry and as such it cannot be said that it was totally unconnected with the business income ineligible for inclusion in the income for deduction under section 80-1 of the Act. The Income-tax Appellate Tribunal was right in holding that the interest received on the deposit kept with the Electricity Board should not be deducted from the gross total income while computing the relief admissible under section 80-1 of the Income-tax Act, 1961. The question is answered in the affirmative and against the Revenue. There will be no order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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