TMI Blog2007 (11) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... y for deduction under section 80-I, it being linked for better business prospects and there is no nexus between export earnings and interest income - 1252 of 2007 - - - Dated:- 7-11-2007 - K. RAVIRAJA PANDIAN and MRS. CHITRA VENKATARAMAN JJ. C. V. Rajan for the appellant. JUDGMENT The judgment of the court was delivered by MRS. CHITRA VENKATARAMAN J. - The appeal is filed by the assessee against the order of the Income-tax Appellate Tribunal, Chennai, made in I. T. A. No. 553/Mds/2005, seeking admission on the following substantial questions of law: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the appellant is not entitled to deduction under section 80-I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [2003] 262 ITR 278, held that unless and until the income earned is inextricably connected with the industrial undertaking, the question of extending the benefit of deduction under section 80-I does not arise. 4. As far as the first question is concerned, viz., the deduction under section 80-I in respect of duty drawback, learned counsel for the appellant placed reliance on the Gujarat High Court decision reported in CIT v. India Gelatine and Chemicals Ltd. [2005] 275 ITR 284, wherein it was held that duty drawback was "derived from" the industrial undertaking and, therefore, would be eligible for deduction under section 80J. Learned counsel for the appellant also pointed out that in the case of duty drawback, the same was given sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : get or trace from a source ; arise from originate in ; show the origin or formation of. The Division Bench also followed the decision of this court reported in CIT v. Pandian Chemicals Ltd. [1998] 233 ITR 497. 7. In the said decision, this court held that profits or gains eligible for deduction under section 80HH must be derived from the actual conduct of the business. This court further held that the mandate of law is that unless the source of the profit is the undertaking the assessee is not eligible to claim deduction under section 80HH; that mere commercial connection between the income and the industrial undertaking would not be sufficient. This court held that profits and gains derived from industrial undertaking denotes tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant to deduction under section 80-I in respect of the interest earned on amounts retained by the bank, the learned counsel for the appellant produced the details regarding the deposits made in the bank to substantiate that they relate to industrial activity. However, deposits do not show that the same is relatable to the interest on the profit by the industrial activity. The deposits admittedly made out of profits are kept in the bank for the convenience of availing of further facilities from the bank. In the background of the same, interest on deposit made would not qualify for deduction under section 80-I. In this connection, this court, in the decision reported in Dollar Apparels v. ITO {2007) 294 ITR 484, considered the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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