TMI Blog1986 (2) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... 09,492 ; and (2) interest on deposits Rs. 92,550. The Income-tax Officer held that these sums did not form a part of the income arising out of a priority industry. The Appellate Assistant Commissioner also held that there was no direct correlation between these receipts and the priority industry. The Tribunal, in appeal filed by the assessee, took the view that the interest on deposits and profit on sale of assets could not be considered as profits arising from manufacturing of articles and that every item of profit in a manufacturing organisation would not constitute manufacturing profits. Taking the view that the profit must emanate from the activity of manufacturing the articles, the Tribunal found that the two items in question could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch balancing charge would have to be taken into account before computing the deduction of 8 per cent. contemplated by section 80E. In our view, the same would be the position in a case where deduction is claimed under section 80-1. Accordingly, the Tribunal was not right in excluding a sum of Rs. 1,09,492 for the purpose of computing the deduction at 8 per cent. under section 80-I. In so far as the amount of interest on deposits amounting to Rs. 92,556 is concerned, learned counsel appearing on behalf of the assessee has contended that this interest was received from suppliers of raw materials, the State Electricity Board, banks as well as on security deposits with other agencies and these interests must also, therefore, be attributable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80-1 uses the expression " attributable to " which is much wider in import than the expression " derived from " as pointed out by the Supreme Court in Cambay Electric Supply Industrial Company's case [1978] 113 ITR 84. When the company has to keep security deposits, such deposits are necessary for the purpose of its business and any interest obtained from such deposits would be clearly attributable to priority industry. Similarly, if there were contracts for supply of raw materials with suppliers and the suppliers have failed to abide by the contract and return the advance given by the company with interest, such interest will also have a direct nexus with the business of the priority industry. We are, therefore, of the view that excep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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