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TMI Blog2005 (4) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... arged in the absence of specific directions in this regard, such ground was not adjudicated in first appeal, the issue being legal, charging of interest under s. 234B at Rs. 17,97,693 was not justified in the ratio of Supreme Court judgment in the case of CIT vs. Ranchi Club Ltd. (2000) 164 CTR (SC) 200 : (2001) 247 ITR 209 (SC)." 2. The assessee in its return declared nil income and deemed income of Rs. 60,18,557 under s. 115JA was filed on 30th Nov., 1998 which was processed under s. 143(1)(a) on 9th Dec., 1998. The statutory notices under s. 143(2) and detailed questionnaire was served upon the assessee. The assessee is a manufacturer of fertilizer and paper. The assessee received dividend income amounting to Rs. 10,33,550. He claimed the same as exempt both under ss. 10(33) and 115JA in computation of total income. On scrutiny of return, the AO found that the assessee received this dividend income before 1st of June, 1997 and TDS on such income has not been deducted. On asking, the assessee vide its letter dt. 7th Oct., 2000 claimed that the same is exempt under s. 10(33) of the Act. The AO held that the dividend income will be taxable and, therefore, added to the total incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder s. 80-IA in respect of interest income at Rs. 20,42,542 and miscellaneous income at Rs. 7,90,690 is also covered against the assessee by the decision of the Hon'ble apex Court pronounced in the case of Pandian Chemicals Ltd vs. CIT (2003) 183 CTR (SC) 99 : (2003) 262 ITR (SC) 278. While computing the deduction the AO excluded the interest income and miscellaneous income. The Hon'ble apex Court clearly held that deposit made with Electricity Board for supply of Electricity and interest from business of such deposits is not derived from business of such undertaking. The Hon'ble apex Court further held that the word 'derived from' must be understood as something which has a direct or immediate nexus with the assessee's industrial undertaking and thus could not be said to flow directly from the industrial undertaking itself and thus special deduction is not allowable. The Hon'ble apex Court approved the decision of the Hon'ble High Court of Madras pronounced in CIT vs. Pandian Chemicals Ltd. (1998) 147 CTR (Mad) 5 : (1998) 233 ITR 497 (Mad). So this ground of the assessee is also dismissed. 7. Ground No.3 for adjusting unabsorbed depreciation of earlier years before allowing ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar to the facts already decided by the Tribunal, respectfully following the same that is too in the case of the assessee this ground of the Revenue deserves to be dismissed. However, the learned Departmental Representative relied upon certain judicial pronouncements and contended that these judicial pronouncements were not considered by the Tribunal at earlier occasion. On perusal of record, we have found that during arguments of ITA Nos. 838, 842, 841/Chd/2000, both the learned representatives were same and on asking a specific question by the Bench to the learned Departmental Representative whether these judicial pronouncements were brought to the notice of the Bench, the specific reply was "no'. Under these circumstances, we are of the view that there was no occasion for the Bench to consider these judicial pronouncements. In ITA No. 838/Chandi/2000 the similar issue, i.e., interest-free loans to sister-concerns was discussed in detail and the relevant findings which are available at p. 14 in ITA No. 729/Chandi/2000 are reproduced as under: "10 Ground No.2 of the appeal of the Revenue relates to the disallowance of interest of Rs. 52,43,188 on interest-free loans given t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A No. 19/Chandi/1997, ground No.1 of ITA No. 142/Chandi/1997 and ground No.2 of ITA No. 347/Chandi/1997 pertaining to the disallowance of interest of Rs. 7,73,518, Rs. 7,74,940 and Rs. 5,24,250, respectively by the tax authorities below out of interest payment claimed by the assessee on account of interest-free loans given for non-business purposes out of the other profit account, are allowed. Thus learned Authorised Representative for the assessee submitted that the issue involved in the ground No.2 of the instant appeal of the Revenue is liable to be decided against the Revenue and in favour of the assessee' 10.4 Learned Departmental Representative for the Revenue was fair enough to concede on the issue 10.5 In this view of the matter and respectfully following the order dt. 26th May, 2004 of the Tribunal, the issue involved in ground No.2 of the instant appeal of the Revenue is decided against the Revenue and in favour of the assessee. Accordingly, we uphold the impugned order of the CIT(A) and reject ground No.2 of the instant appeal of the assessee." 14. In Para 10.4 at p. 16 of the said order it has been specifically mentioned that learned Departmental Representative fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l undertaking of processing sea food. Answering the question in favour of the Revenue, the apex Court observed: "We do not think that the sources of the import entitlements can be said to be the industrial undertaking of the assessee. The source of the import entitlements can, in the circumstances, only be said to be the export promotion scheme of the Central Government whereunder the export entitlements become available. There must be, for the application of the words 'derived from', a direct nexus between the profit and gain and the industrial undertaking, in the instant case, the nexus is not direct but only incidental. The industrial undertaking exports processed sea food. By reason of such export, the export promotion scheme applied. Thereunder, the assessee is entitled to import entitlements, which it can sell. The sale consideration therefrom cannot, in our view, be held to constitute a profit and gain derived form the assessee's industrial undertaking". In case of North East Gases the question was whether income derived from interest could be treated as income derived from industrial undertaking. It was held that since sources of income did not emerge from the running of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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