TMI Blog2008 (8) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... t with M. P. E. B. for supply of high tension electricity. - 44 of 1998 - - - Dated:- 19-8-2008 - DIPAK MISRA and K. S. CHAUHAN JJ. Sandesh Jain for the assessee. Sanjay Lal for the Commissioner. JUDGMENT This is a reference under section 256(1) of the Income-tax Act, 1961, by the Income-tax Appellate Tribunal at the instance of the assessee in respect of the following question of law: "Whether the Tribunal is right in law in holding that deduction under sections 80HH and 80-I was not available on interest received on short-term deposit of money, on investment in IDBI and on security deposit with M. P. E. B. for supply of H. T. electricity." 2. We have heard Mr. Sandesh Jain, learned counsel for the appellant assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion referred to it by the Tribunal, the High Court would decline to answer the question referred. The Division Bench placing reliance on the decision rendered in Gajadhar Prasad Nathu Lal v. CWT [1970] 76 ITR 615 (MP) declined to answer the reference. 5. In Karnani Industrial Bank Ltd. v. CIT [1956] 30 ITR 16 (Cal), the Bench took note of the fact that the assessee appeared through an advocate and brought to the notice that the question has now been finally determined against the contention of the assessee by the highest court of the country. In the circumstances, the only order which could possibly be made the order is in accordance with the previous decision which has been affirmed by the Supreme Court. 6. K. Ch. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's activities of an industrial undertaking. Similarly, the Assessing Officer came to the conclusion that the interest on deposits in I. D. B. I. is also not generated from the industrial undertaking as the Income-tax Act does not compel the assessee to deposit any amount with I. D. B. I. Because of the aforesaid view the Assessing. Officer denied the said benefits to the assessee. 10. On an appeal being filed the Commissioner of Income-tax (Appeals), vide order dated July 22, 1992, treated the same as the business income and allowed the deductions under sections 80HH and 80-I excluding the amount of Rs. 26,519 which was conceded to by learned counsel for the assessee. Be it noted, the appellate authority allowed the appeal of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Tamil Nadu Electricity Board should be treated as income derived by the industrial undertaking for the purpose of section 80HH ?" held as under (page 280): "The word 'derived' has been construed as far back in 1948 by the Privy Council in CIT v. Raja Bahadur Kamakhaya Narayan Singh [1948] 16 ITR 325 (PC) when it said (page 328): 'The word "derived" is not a term of art. Its use in the definition indeed demands an enquiry into the genealogy of the product. But the enquiry should stop as soon as the effective source is discovered. In the genealogical tree of the interest land indeed appears in the second degree, but the immediate and effective source is rent, which has suffered the accident of non-payment. And rent is not la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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