9911796707
TMI Blog2006 (8) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. CIT [ 2006 (7) TMI 110 - PUNJAB AND HARYANA HIGH COURT] wherein, following passage from the judgment of the hon'ble Supreme Court in Sterling Foods' case [ 1999 (4) TMI 1 - SUPREME COURT] was relied upon, which deals with the words derived from. Accordingly, we are of the view that the assessee will not be entitled to deduction u/s 80-IA of the Act in respect of profit derived from the business of trading of products of other concerns as the same cannot be held to be profits and gains derived from industrial undertaking. The questions are, accordingly, answered against the assessee and in favour of the Revenue - Accordingly, the appeal is dismissed. - HON'BLE ADARSH KUMAR GOEL, RAJESH BINDAL, JJ. For the Appellant : R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies and have perused the relevant finding of the Tribunal on the said questions, which is to the following effect: 21. The issue before us revolves around as to whether the profit derived by the assessee from export of finished goods purchased by it can be considered to be the profits derived from the industrial undertaking of the assessee which is inter alia, engaged in the manufacture of footwear. We find the legal position in this regard is now well settled by various judgments of the apex court. The decision of the apex court in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 makes a distinction between the expression namely 'attributable to' and 'derived from'. According to the hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the income derived by the assessee from the export of traded goods could be said to have been derived from the industrial undertaking of the assessee and, therefore, the Assessing Officer was correct in excluding the same for the purposes of computing deduction under section 80-IA of the Act. The reason being that the impugned business of the eligible undertaking of the assessee is the manufacture and sale of PVC and footwear, i.e., the goods so manufactured by the industrial undertaking per se. Although the profits from such exports, on parameters of being incidental to business, can fall within the scope of the business of the assessee, yet it cannot be said to have been derived from the eligible industrial undertaking of the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit earned by the business of the assessee was eligible for deduction. It was not necessary that the business must be from activity of industrial undertaking as such. Learned counsel for the Revenue, however, submitted that the exemption was not applicable where profit derived by the assessee had no nexus with the industrial activity of the assessee. The trading activity of the assessee could not be intended to be covered by the exemption. The exemption was not available merely by setting up an industrial undertaking. The exemption was available only in respect of profit derived from the said undertaking. It was submitted that as held by the hon'ble Supreme Court in CIT v. Sterling Foods [1999] 237 ITR 579, it did not cover any and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'get, to trace from a source; arise from, originate in, show the origin or formation of'. The source of import entitlements could not be said to be the industrial undertaking of the assessee. The source of the import entitlements could only be said to be the Export Promotion Scheme of the Central Government whereunder the export entitlements became available. There must be, for the application of the words 'derived from', a direct nexus between the profits and gains and the industrial undertaking. In the instant case, the nexus was not direct but only incidental. The industrial undertaking exported processed sea foods. By reason of such export, the Export Promotion Scheme applied. Thereunder, the assessee was entitled to imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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