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TMI Blog2015 (6) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... st revenue. Late payment charges - The character of this receipt has not been disputed by the ld. DR. In essence, the late payment charges are nothing, but, part of sale consideration which cannot be viewed differently. Once deduction is available on sale consideration, there can be no reason to deny deduction on such late payment charges, which are part and parcel of such sale consideration. We, therefore, uphold the impugned order allowing deduction u/s 80IA on this amount. -Decided against revenue. Interest on employees - disallowance of deduction u/s 80IA - Held that:- There is no direct nexus of such interest income with the eligible undertaking inasmuch as the immediate source of such income is not the eligible undertaking. Such income may be attributable to the business of the eligible undertaking, but, cannot be held as derived from the eligible undertaking - Decided against assesse. Machines hire charges - Held that:- The assessee received hire charges in respect of certain machines which were given on hire to its contractors who were engaged in the erection and construction of the power generation facility. We fail to appreciate as to how such machine hire charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... achine hire charges ₹ 1298369.00 Rent receipts ₹ 2626552.96 Sundry receipts ₹ 6418412.34 Excess provision written back ₹ 11611006.22 Profit on sale of assets ₹ 1191502.46 Late payment surcharge ₹ 4451755.00 Total Rs.6,56,22,279.25 5. The AO observed that the assessee claimed deduction u/s 80IA on all the above items of income except `Interest from bank to the tune of ₹ 1,01,12,153/- and `Profit from sale of assets . It was opined that the other items of income as listed in the above table were derived from independent source of income and did not have any first degree nexus with the generation of power. Relying on the judgment of the Hon ble Supreme Court in the case of Liberty India vs. CIT (2009) 317 ITR 218 (SC), he denied deduction u/s 80IA on the remaining items. The ld. CIT(A) got convinced with the assessee s contention in respect of `Excess provision written back and `Lat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first degree. On analysis of ss. 80-IA and 80-IB it becomes clear that any industrial undertaking, which becomes eligible on satisfying sub-s. (2), would be entitled to deduction under sub-s. (1) only to the extent of profits derived from such industrial undertaking . In the case of Pandian Chemicals vs. CIT (2003) 262 ITR 278 (SC), the issue was whether the Interest earned by industrial undertaking on deposits with Electricity Board qualifies for relief under s. 80HH. In this section also, the expression used is `derived from . Answering the question in favour of the Revenue, the Hon ble Summit Court held that : `The words 'derived from' in s. 80HH must be understood as something which has direct or immediate nexus with the appellant's industrial undertaking. Although electricity may be required for the purposes of the industrial undertaking, the deposit required for its supply is a step removed from the business of the industrial undertaking. The derivation of profits on the deposit made with Electricity Board cannot be said to flow directly from the industrial undertaking itself. Where the words are unequivocal, there is no scope for importing any rule of interpreta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges are nothing, but, part of sale consideration which cannot be viewed differently. Once deduction is available on sale consideration, there can be no reason to deny deduction on such late payment charges, which are part and parcel of such sale consideration. We, therefore, uphold the impugned order allowing deduction u/s 80IA on this amount. 10. In the Cross Objections, the assessee is aggrieved against not allowing of deduction u/s 80IA on the remaining amounts. I. Interest on employees: 11. The first item is interest which was received against advances to its employees for various purposes, such as, house building, purchase of computer, etc. Even though the employees were engaged in power generation, the fact remains that the interest received by the assessee on loans advanced by the assessee to its employees cannot be characterized as income `derived from eligible undertaking. There is no direct nexus of such interest income with the eligible undertaking inasmuch as the immediate source of such income is not the eligible undertaking. Such income may be attributable to the business of the eligible undertaking, but, cannot be held as derived from the eligible un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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