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TMI Blog2022 (5) TMI 1570X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 80IC of the Act. In course of assessment proceeding, the Assessing Officer noticing that the assessee has claimed deduction under section 80IC of the Act, called upon the assessee to furnish the necessary details. On examining the details furnished by the assessee, the Assessing Officer found that the deduction under section 80IC of the Act was claimed in respect of Nalagarh Unit situated at Himachal Pradesh. On further verification of audited financial statement, he found that the assessee has included interest income earned on fixed deposits in the business profit for computing deduction under section 80IC of the Act. Therefore, he called upon the assessee to explain, why the interest income not being profits of the eligible business should not be reduced from the profits of the business for computation of deduction under section 80IC. Alleging that assessee failed to furnish any satisfactory reply, the Assessing Officer disallowed assessee's claim of deduction under section 80IC of the Act in respect of interest income. Though, the assessee contested the aforesaid disallowance before learned first appellate authority, however, he did not succeed. 4. Before us, learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions enshrined therein. Thus, what is eligible for deduction under the aforesaid provision is the profit and gain derived from manufacture or production of any article or things specified in the provision. Sub-section (7) of section 80IC provides that the provisions contained under sub-sections (5) and (7) to (12) of section 80IA shall so far as may be applied to section 80IC of the Act. Sub-section (5) of section 80IA provides that for computing deduction under section 80IC of the Act, the business relating to manufacture or production of any article or things in terms of sub-section (2) of section 80IC has to be taken as the only source of income of the assessee during the year, wherein, the deduction is claimed. The expression "derived from" has come up for interpretation before the Hon'ble Apex Court in case of Pandian Chemical Ltd. Vs. CIT (2003) 262 ITR 278 (SC). The Hon'ble Court held that the expression "derived from" has a narrower connotation than the expression "attributable to". The following observations of the Hon'ble Supreme Court would be of much relevance: "5. The High Court rejected the submission of the appellant by relying upon the decision of this Court in Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacture/production of article or things. 9. In our view, the dispute relating to entry tax would not have any impact on the manufacturing activity of the assessee, since in the worst case the assessee would have brought the raw materials/goods on payment of entry tax. Thus, payment or nonpayment of entry tax would not have stalled the manufacturing activity of the assessee. Therefore, keeping in view the meaning given to the expression derived from by the Hon'ble Supreme Court in the decision referred to above it cannot be said that the interest income earned by the assessee is part of profits and gains "derived from" manufacture or production of article or things. Therefore, in our humble opinion, the interest income earned by the assessee would not qualify for deduction under section 80IC of the Act. As regards the decision relied upon by learned counsel for the assessee, in our humble opinion, it is not applicable to assessee's case. In any case of the matter, we have arrived at our conclusion by applying the ratio laid down by the Hon'ble Supreme Court, which is the law of the land. In view of the aforesaid, we uphold the decision of learned Commissioner (Appeals) on the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 13,19,905/- as expenditure disallowable under section 14A of the Act. Whereas, in the return of income filed for the impugned assessment year, the assessee did not disallow such amount. Therefore, when in the Audit Report furnished by the assessee certain amount has been found to be disallowable, there was no necessity for the Assessing Officer to record any satisfaction as such information is obtained from a document furnished by the assessee itself. Thus, we do not find any merit in the submissions of the assessee regarding non-recording of satisfaction by the AO. However, before us, the assessee has submitted that it had sufficient interest refund available to take care of the investment made. In this regard, we must observe, neither before the departmental authorities nor before us the assessee has furnished any working computing the disallowance under section 14A read with Rule 8D. Therefore, in absence of any such computation/working by the assessee, we are unable to record any conclusive finding regarding assessee's claim. 16. Insofar as assessment year 2014-15 is concerned, for this assessment year also, the assessee, on its own, has not disallowed any expenditure under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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