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TMI Blog2014 (11) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... rious additions and disallowances. Being aggrieved by the additions and disallowances made by the Assessing Officer, the apepllant preferred first appeal before the learned CIT(Appeals) who granted partial relief to the appellant. 2.1 Being aggrieved by the order passed by the learned CIT(A) the appellant as well as respondent preferred appeals before the Tribunal, Ahmedabad Bench. The Tribunal vide impugned orders dismissed the appeal filed by the appellant on certain points pertaining to the above referred deduction and at the same time directed the Assessing Officer to recompute the deductions on the item of dividend income. 2.2 The Tribunal allowed the appeal filed by the revenue in full and the relief granted by CIT(A) for the deduction in respect of items of interest income was reversed to the detriment of the appellant and in favour of the revenue. The major controversy between the appellant and the revenue pertained to interpretation of provisions of section 80HHA and 80-I of the Act for granting deductions. 3. These appeals have been admitted for consideration of the following substantial questions of law: Tax Appeal No. 186 of 2003 "(1) Whether on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and in the circumstances of the case, the Tribunal is right in law in its interpretation of section 80HHA and section 80-I of the Income Tax Act, 1961 in respect of item of interest from IDBI amounting to Rs. 28700/- ?" 4. Mr. R.K. Patel, learned advocate appearing for the appellant in these appeals has drawn our attention to Sections 80HHA and 80-I of the Act and submitted that the Tribunal has grossly erred in interpreting the scope and ambit of the expression 'derived from' used by the legislature in the provisions of section 80HHA and 80-I of the Act. Relying on the decision of this Court in the case of Nirma Industries Ltd. vs. Deputy Commissioner of Income-Tax reported in 283 ITR 402, Mr. Patel submitted that the same item of receipt cannot be treated differently and that the interest on various items i.e. same item of receipt cannot be treated differently: once while computing the gross total income and secondly at the time of computing deduction under section 80-I cannot be done. 4.1 Mr. Patel has also relied upon the unreported decisions rendered by co-ordinate Benches of this High Court dated 21.08.2012 in Tax Appeal No. 257 of 2000 with Tax Appeal No. 256 of 2000 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be treated differently: once while computing the gross total income, and secondly, at the time of computing deduction under section 80I of the Act. Therefore, on this limited count alone the order of the Tribunal, suffers from a basic fallacy resulting in an error in law and on facts. The Tribunal instead of recording findings on facts proceeded to discuss law. This litigation could have been avoided if the parties had invited attention to basic facts." [Emphasis Supplied] 6.1 Sections 80HH and 80-I of the Act are also reproduced hereunder: "80HH. Deduction in respect of profits and gains from newly established industrial undertakings or hotel business in backward areas (1) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking, or the business of a hotel, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent thereof. (2) This section ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed in computing the total income in respect of each of the ten assessment years beginning with the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles or the business of the hotel starts functioning: Provided that,- (i) in the case of an industrial undertaking which has begun to manufacture or produce articles, and (ii) in the case of the business of a hotel which has started functioning, after the 31st day of December, 1970, but before the 1st day of April, 1973, this sub-section shall have effect as if the reference to ten assessment years were a reference to ten assessment years as reduced by the number of assessment years which expired before the 1st day of April, 1974. (5) Where the assessee is a person other than a company or a co- operative society, the deduction under sub- section (1) shall not be admissible unless the accounts of the industrial undertaking or the business of the hotel for the previous year relevant to the assessment year for which the deduction is claimed have been audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is entitled also to the deduction under section 80-I or] section 80J in relation to the profits and gains of an industrial undertaking or the business of a hotel to which this section applies, effect shall first be given to the provisions of this section. (9A) Where a deduction in relation to the profits and gains of a small- scale industrial undertaking to which section 80HHA applies is claimed and allowed under that section for any assessment year, deduction in relation to such profits and gains shall not be allowed under this section for the same or any other assessment year.] (10) Nothing contained in this section shall apply in relation to any undertaking engaged in mining. (11) For the purposes of this section," backward area" means such area as the Central Government may, having regard to the stage of development of that area, by notification 3 in the Official Gazette, specify in this behalf: Provided that any notification under this sub- section may be issued so as to have retrospective effect to a date not earlier than the 1st day of April, 1983.]" Section 80-I(1). - In the case of a comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. vs. CIT [1997] 227 ITR 172 will not be attracted. The more appropriate decision in the factual situation in the present case is in CIT vs. Bokaro Steel Ltd. [1999] 236 ITR 315 (SC). The appeal is dismissed. There will be no order as to costs." 9.1 Similarly the relevant observations made in Tax Appeal No. 257 of 2000 by this Court are as under: "13. In the present case, the assessee's stand has consistently been that due to insistence of the financial institutions, the assessee was compelled to park certain amount in fixed deposits from which it earned interest of 12 per cent, whereas the market rent at the relevant time was higher. Such interest income was utilized for the purpose of assessee's business by purchasing new machinery. In short, the assessee contended that such income cannot be treated as income from other sources, but must be seen as part of the assessee's business income. 15. In view of the exercise already undertaken by the Delhi High Court in the case of Jaypee DSC Ventures Ltd (supra), we may not separately refer to in detail the facts and ratio of the various decisions of the Supreme Court, note ..... X X X X Extracts X X X X X X X X Extracts X X X X
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