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TMI Blog2003 (10) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... redit side of the P L a/c included the interest income of Rs. 3,01,04,374 from customers on delayed payments, Rs. 4,76,739 on account of interest on margin money deposits and Rs. 5,58,568 on account of interest on deposits with Maharashtra State Electricity Board and interest on other deposits amounting to Rs. 75,29,794 totalling Rs. 3,86,69,475. The assessee was asked to explain as to how it was entitled to deduction under s. 80-IA in respect of the aforesaid interest income. After considering the submissions of assessee in the light of the Supreme Court judgment in the case of CIT vs. Govinda Choudhary Sons (1994) 116 CTR (SC) 61 : (1993) 203 ITR 881 (SC) and the decision of the Tribunal in the case of Rollatainers Ltd., it was held by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the submissions made by the assessee. According to him, the words derived from used in s. 80-IA could not have a wider import so as to include any income which can in some manner be attribute to the business. So there must be a direct link between the income earned and the industrial undertaking in the sense that the industrial undertaking itself must be the immediate source of income. In support of this legal position, he relied on the following judgments: (i) CIT vs. Raja Bahadur Kamakhya Narain Singh (1948) 16 ITR 325 (PC) (ii) CIT vs. Cochin Refinery Ltd. (1982) 27 CTR (Ker) 147 : (1982) 135 ITR 278 (Ker) (iii) Cambay Electric Supply Industrial Co. Ltd. vs. CIT 1978 CTR (SC) 50 : (1978) 113 ITR 84 (SC) (iv) CIT vs.Ster ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order to point out that the AO had considered this issue in detail and then had come to the conclusion that assessee was entitled to deduction. It was also submitted by him that if the AO has applied his mind then CIT cannot substitute his own opinion in place of the AO. Reliance was placed on the Bombay High Court judgment in the case of CIT vs. Gabriel India Ltd. (1993) 114 CTR (Bom) 81 : (1993) 203 ITR 108 (Bom) and Gujarat High Court judgment in the case of CIT vs. Arvind Jewellers (2002) 177 CTR (Guj) 546 : (2003) 259 ITR 502 (Guj). The second contention was that if the AO has taken a possible view then CIT cannot assume jurisdiction under s. 263. Reliance was placed on the Supreme Court judgment in the case of Malabar Indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in the case of Pandian Chemicals Ltd. vs. CIT (2003) 183 CTR (SC) 99 : (2003) 262 ITR 278 (SC) wherein it has been held that interest on deposits with MSEB does not qualify for deduction under s. 80-I/80HH. He also referred to another decision of the Supreme Court in the case of Hindustan Lever Ltd. vs. CIT (1999) 156 CTR (SC) 506 : (1999) 239 ITR 297 (SC) wherein it has been held that the words "derived from" should be understood in the restricted sense. 9. In reply, it was submitted by the assessee that subsequent decision of the Supreme Court in the case of Pandian Chemicals is not relevant in deciding the issue regarding the validity of assessment of jurisdiction under s. 263. In this connection, he drew our attention t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TTJ (Pune) 72 and Inductotherm (India) Ltd. vs. Dy. CIT (2002) 75 TTJ (Ahd) 728 has held that interest received from customers is eligible for deduction under ss. 80-I/80-IA/80HH. Regarding the interest on deposits as margin money with the banks and interest on deposits with State Electricity Board, various benches of the Tribunal have held that such interest was income derived from industrial undertaking. Reference can be made to the various decisions, namely, Dy. CIT vs. Jagdish Electronics (P) Ltd. (1998) 66 ITD 542 (Pune), Vikshara Trading Co. Inv. Ltd. vs. Dy. CIT (1998) 61 TTJ (Ahd) 6 : (1998) 99 Taxman 229 (Ahd)(Mag), R. Prakash vs. Asstt. CIT (2002) 75 TTJ (Coch) 546 and Ambika Cotton Mills vs. Jt. CIT (2001) 71 TTJ (Mad) 871 : (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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