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TMI Blog2013 (10) TMI 1036X X X X Extracts X X X X X X X X Extracts X X X X ..... g that service charges received from the Heavy Water Board of Department of Atomic Energy could not be considered as profit derived from the industrial undertaking to qualify for deduction under Section 80-I of the Act? (2) Whether- (i) interest income from employees on advances; (ii) service charges from Heavy Water Plan; (iii) equipment hire charges; (iv) crane hire charges; (v) Ammonia Tanker hire charges; and (vi) interest income from banks and financial institutions are the items of income eligible for deduction under section 80-I of the Income Tax Act." 2. The said order dated 6th September, 2011 records that in an earlier decision dated 15th November, 2006 in the case of the appellant, reported as (2008) 300 ITR 92 (Delhi), s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim/contention of the appellant-assessee was rejected. We accordingly following the said judgment reject the said claim. We also record that crane hire charges would be also covered by the aforesaid decision, which refers to equipment hire charges. 4. Ammonia tanker hire charges are also covered by decision of this Court in the case of the appellant-assessee in ITA No. 955/2008 and other connected appeals, which were disposed of on 23rd April, 2012. In the said decision, we have referred to the concept of "derived from" and it was held that income earned from tanker hire charges were not covered by the term "profits and gains derived from an industrial undertaking". Learned counsel for the appellant has submitted that a wrong factual st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and material placed by the appellant assessee, the transportation charges cannot be treated as profit and gain derived from the manufacturing activity, which qualifies for deduction under Section 80-I" 6. Even if we accept the contention of the appellant that the railway wagons were owned by the appellant-assessee, we do not think the final outcome as held in ITA No. 955/2008 requires reconsideration. The words "derived from" are much narrower and restrictive than the words "attributable to". Income is said to be derived from an industrial undertaking only if it is directly related to the running of the industrial undertaking itself. It would not include income or gains from any other commercial activity undertaken by the assessee. Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the said amounts received do not qualify and cannot be treated as profits and gains derived from an industrial undertaking. Referring to sub-Section (5) of Section 80(IA) it was observed that for computation of profits of eligible undertaking, we have to only look at the source of income of the assessee relating to the eligible undertaking and exclude any other income arising from other commercial activities indulged in by the said assessee. It was elucidated:- "33. On perusal of sub-section (5) of Section 80-IA, it is noticed that it provides for the manner of computation of profits of an eligible business. Accordingly, such profits are to be computed as if such eligible business is the only source of income of the assessee. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omer. It is a service and does not partake character and is not a part of manufacture. Question No. 2(ii) in respect of ammonia tanker hire charges is, therefore, to be decided against the appellant-assessee. 8. Question No. (1) and item No. (ii) of question No. (2) are inter-connected. The said issue is covered in favour of the appellant-assessee and against the revenue vide judgment dated 24th July, 2013 in ITA No. 1248/2010 titled Krishak Bharti Cooperative Limited versus Deputy Commissioner of Income Tax and Another. In the said judgment after examining the nature and character of the service charges, the agreement between the appellant and Heavy Water Board, Department of Atomic Energy, Government of India, a Division Bench has opined ..... X X X X Extracts X X X X X X X X Extracts X X X X
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