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Issues:
1. Deduction of amounts contributed to contingencies reserve for assessment years 1969-70 and 1970-71. 2. Deduction of amounts transferred to development reserve and tariff and dividend control reserve for assessment years 1969-70 and 1970-71. 3. Entitlement to relief under section 80-I for income derived from investments in securities. Deduction of Contingencies Reserve and Development Reserve: The Tribunal referred three questions under section 256(1) of the Income Tax Act, 1961 regarding deductions for contingencies reserve and development reserve. The High Court, following a previous decision, ruled in favor of the revenue and against the assessee for both issues. Entitlement to Relief under Section 80-I for Income from Investments: The assessee, an electricity distribution company, claimed a deduction under section 80-I for interest received on securities, arguing it was attributable to the business of distribution of electricity due to a statutory obligation to invest in approved securities. However, the revenue contended that the income was not directly related to the business activities. The High Court analyzed the provisions of section 80-I and concluded that the interest income from investments in securities did not qualify for the deduction under the section. The Court held that the income should arise from the specific business activities of generation or distribution of electricity to be eligible for the deduction, and since the interest income did not have a direct nexus with the business, the assessee was not entitled to relief under section 80-I. The question was answered against the assessee, and costs were awarded to the revenue.
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