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TMI Blog1978 (7) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case, the technical service fee secured by the assessee was income from priority industry for purposes of section 80-I of the Income-tax Act, 1961 ? " The assessee is the Mysore Electrical Industries Ltd., which is engaged in the production of equipment for generation and transmission of electricity including transformers. These cases relate to the assessment years 1969-70, 1970-71 and 1972-73. During the relevant accounting period, the assessee had received some amounts, by way of technical fees under a technical collaboration agreement entered into by it with M/s. United Electrical Industry Ltd., in the State of Kerala. The assessee claimed relief in respect of the said receipts under section 80-I of the Act. The Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stic company to which section 80-I applies. It is also not in dispute that it is engaged in the production of the goods and articles which are described at item No. 7 in the Sixth Schedule of the Act. The assessee, therefore, satisfied that it was carrying on business which came within the definition of the expression " priority industry " found in sub-section (7) of section 80B of the Act as it stood then. The authorities under the Act disallowed the claim of the assessee for relief under section 80-I on the sole ground that the receipts in question, viz., the technical fees received by the assessee from the United Electrical Industry Ltd., were not profits and gains attributable to any priority industry, because the income in question was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. Ltd. v. Commissioner of Income-tax [1978] 113 ITR 84, 93 the Supreme Court while construing the expression " attributable to " in section 80E(1) observed as follows : " As regards the aspect emerging from the expression ' attributable to ' occurring in the phrase ' profits and gains attributable to the business of ' the specified industry (here generation and distribution of electricity) on which the learned Solicitor-General relied, it will be pertinent to observe that the legislature has deliberately used the expression ' attributable to ' and not the expression ' derived from '. It cannot be disputed that the expression ' attributable to ' is certainly wider in import than the expression ' derived from '. Had the expression ' derive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ributed only to the said competence and the technical knowhow which the assessee had come to possess by carrying on the business in question. The income in question was only the result of another way of exploitation of the business in which the assessee was engaged. This view receives support from the decision of the House of Lords in Rolls-Royce Ltd. v. Jeffrey [1962] 1 All ER 801; [1965] 56 ITR 580, 588 (HL) in which Lord Radcliffe said : " My Lords, in my opinion, moneys so obtained arise from the appellants' trade as ' manufacturers of motor-cars and aero-engines '. I appreciate their point that such moneys are not derived from their own operations of manufacture and, therefore, if assessable at all, must be attributable to a new and s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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