9911796707
TMI Blog1998 (2) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case, the Appellate Tribunal was right in holding that the receipts on account of selling agency commission, receipts from job works, interest on deposits and exchange fluctuations on forward contract should be taken into account as receipts attributable to priority industry for allowing relief under section 80E/80-I of the Income-tax Act, 1961 ?". The assessee is a company engaged in the manufacture of tie rods and clutches, viz., automobile parts. There is no dispute that the assessee is a priority industry. For the assessment years 1966-67 to 1971-72, the assessee, inter alia, claimed relief under sections 80E and 80-1 of the Income-tax Act, 1961 (hereinafter to be referred to as "the Act"), in respect of the following receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act for the assessment years 1966-67 to 1970-71 and for the assessment year 1971-72, the assessee claimed the relief under section 80-I of the Act. In so far as the first item of dispute, viz., commission received by the selling agent is concerned, it was found that the assessee was the selling agent of the product of Engine Valves Ltd. The Appellate Tribunal held that the assessee was the selling agent of Engine Valves Ltd. and the selling agency business of the assessee was a part of the business activities of the assessee and the selling agency commission was attributable to the priority industries on the ground that the assessee had sold the products of Engine Valves Ltd. and received commission as part of its business income. The Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority industry carried on by the assessee, viz., manufacture of tie rods and clutches. The contention of Mr. Janarthana Raja, learned counsel for the assessee, was that Engine Valves Ltd. is a priority industry and since the assessee sold the product manufactured by Engine Valves Ltd., the assessee would be entitled to the relief under sections 80E and 80-I of the Act. We are of the opinion that mere fact that the assessee sold the product manufactured by a priority industry would not entitle the assessee to claim relief under sections 80E and 80-I of the Act. Engine Valves Ltd. who manufactured the product might have been entitled to the relief under sections 80E and 80-I of the Act, but that is a different matter and in so far as the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... job works carried on by the assessee and the priority industry of the assessee. We are of the opinion that on the amount received by way of receipts from the job works, the assessee is entitled to the relief under sections 80E and 80-I of the Act. The next item with which we are concerned is interest on deposits The assessee had shown under the head "Interest on deposits", several receipts consisting of interest received from the customers for delayed payments or on the temporary banking of the surplus funds or on cash sundry deposits for obtaining electricity connection or such other business realisation. In so far as the interest received by the assessee from the customers for delayed payments is concerned, we are of the opinion that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be regarded as in any way attributable to priority industries. Mr. Janarthana Raja, learned counsel for the assessee, submitted that the assessee kept only the surplus business money in the bank and, therefore, on the interest received on the surplus money kept in the bank, the assessee would be entitled to the relief under sections 80E and 80-1 of the Act. He distinguished the earlier decision of this court in English Electric Co. of India Ltd. v. CIT [1987] 168 ITR 513 on the ground, that in that case the money was kept in fixed deposit in the bank either as a security or for a fixed term and the case dealing with the fixed deposit would stand on a different footing from the surplus business income kept in a bank for a short duratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and interest received on advance tax. In so far as these amounts are concerned, the assessee is not entitled to the deduction under sections 80E and 80-I of the Act, and in respect of other interest receipts the assessee would be entitled to the relief under sections 80E and 80-1 of the Act. The next item with which we are concerned is the receipts arising on account of the exchange fluctuation due to forward contract entered into by the assessee. The Tribunal has recorded a finding that the assessee entered into a forward contract with some foreigners and due to different exchange rates, certain amounts were received by the assessee during different years. The Tribunal also found that the forward contract had a nexus with the goods sold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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