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TMI Blog2014 (12) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... red by it. In his order of assessment, dated 15.03.1996, the Assessing Officer disallowed the deduction by treating it as not qualified under Section 80HH of the Act. The respondent filed an appeal before the Commissioner (Appeals). The appeal was allowed through order, dated 10.07.1996. Aggrieved by that, the Revenue filed I.T.A.No.1671/Hyd/96 before the Hyderabad Bench of the Income Tax Appellate Tribunal. The appeal was dismissed through order, dated 29.05.2001. Hence, this further appeal under Section 260-A of the Act by the Revenue. The following substantial question of law is canvassed before this Court: Whether on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that the interest earned from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration. Learned counsel further submits that the subject matter of the judgment of the Supreme Court in Pandian Chemicals Ltd s case (1 supra), is incomparably different from that of the present case. He has relied upon the judgment of the Supreme Court in Commissioner of Income-Tax vs. Govinda Choudhury and sons. and of the Karnakata High Court in Commissioner of Income-Tax vs. Sri Hariram Hotels P. Ltd. Chapter VIA of the Act provides for deduction of profits and gains of a stipulated fraction from the income derived from the concerned activity. The effort of the Parliament is to encourage industrialists and entrepreneurs to undertake an activity, which in turn may add to the economy of the Nation. The common phrases that occur i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, which genuinely do not fall into that category. Equally the attentive Assessing Officers would scrutinize the matter and disallow the claims, if according to them they do not partake the same character as enunciated in a particular provision. The facts of the present case do not pose much of a difficulty. Unlike in several other cases, the assessee in the instant case was undertaking only one activity viz., manufacture of cold roll strips. The income posted by him in the income tax returns comprised mostly of the sale proceeds of product manufactured by it. The books of account revealed the consideration that is received for the product that is sold from time to time. Wherever the payment was made at a subsequent stage, and the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the price may stand reduced. Conversely, if the demand is heavy and the supply is less, a premium may accrue to the product and depending upon the financial status and discipline of the manufacturer or trader, the product may be sold at a phenomenally higher price. Whatever may be the fluctuations in the trade in relation to a product, what becomes relevant from the point of view of Section 80HH of the Act, is the profit and gain, which the assessee has derived from the activity. Whether to promote sales or to ensure that the stock, which has piled up in a particular period is cleared, or to accommodate a regular customer, the manufacturer may offer the sale of the product on credit, subject to payment of interest for the belated paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the specific heads of charges. We find it difficult to comprehend how the interest receipts by the assessee can be treated as receipts which flow to him de hors the business which is carried on by him. In our view, the interest payable to him certainly partakes of the same character as the receipts for the payment of which he was otherwise entitled under the contract and which payment has been delayed as a result of certain disputes between the parties. It cannot be separated from the other amounts granted to the assessee under the awards and treated as income from other sources. The second question is, therefore, answered in favour of the assessee and against the Revenue. Learned counsel for the appellant relied upon the judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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