Krishak Bharti Cooperative Limited v. Deputy Commissioner Of Income Tax

THE HIGH COURT OF DELHI AT NEW DELHI %Judgment delivered on: 24.07.2013 +ITA No. 1248/2010 KRISHAK BHARTI COOPERATIVE LIMITED …Appellant versus DEPUTY COMMISSIONER OF INCOME TAX …Respondent Advocates who appeared in this case:For the Appellant : Mr S. Ganesh, Sr Advocate with Ms Surekha Raman,Mr Varun Singh and Mr Purushottam Kumar Jha: Mr Rohit Madan Kumar, Ms Pushpa Sharma For the Respondent WITH…Appellant +ITA No. 614/2011 KRISHAK BHARTI COOPERATIVE LIMITED versus ADDITIONAL COMMISSIONER OF INCOME TAX … Respondent Advocates who appeared in this case: For the Appellant: Mr S. Ganesh, Sr Advocate with Ms Surekha Raman,Mr Varun Singh and Mr Purushottam Kumar JhaFor the Respondent: Mr Rohit Madan Kumar, Ms Pushpa Sharma CORAM:-HON’BLE MR JUSTICE BADAR DURREZ AHMED, ACTINGCHIEF JUSTICEHON’BLE MR JUSTICE R.V. EASWAR JUDGMENT BADAR DURREZ AHMED, ACJ 1.These appeals pertain to the assessment years 1993-94 and 1994-95.ITA No.1248/2010, which relates to the assessment year 1993-94, has beentaken to be the lead matter and the facts of that case would be considered.The other appeal, ITA No.614/2011 is on virtually identical lines. 2.By virtue of an order dated 06.09.2011, a Division Bench of thiscourt, while admitting the said appeals, framed the following substantialquestion of law:- “Whether in the facts and circumstances of the case, the Tribunalwas justified in holding that service charges received from theHeavy Water Board of Department of Atomic Energy could not beconsidered as profit derived from the industrial undertaking toqualify for deduction under Section 80-I of the Act ?” 3.The service charges, which have been received by the appellant (Kribhco)was in respect of Kribhco operating and maintaining the heavy water plant, alsoknown as the Hazira Ammonia Extension Plant (HAEP), owned by the HeavyWater Board, Department of Atomic Energy, Government of India. The issue iswhether these service charges can be regarded as profits and gains of Kribhco‘derived from an industrial undertaking’ and, consequently, whether Kribhcowould be entitled to any deduction under Section 80-I of the Income-tax Act,1961. 4.In respect of the assessment year 1993-94, the extent of the above servicecharges was Rs 6,36,45,631/-.Initially, the appellant (Kribhco) claimeddeduction under Section 80-I of the said Act in respect of the said service charges. Subsequently, during the assessment proceedings, the assessee revisedthe claim by excluding these charges for the purposes of deduction under Section80-I and treated them as its income from other sources. The Assessing Officer,while computing the profits eligible for deduction under Section 80-I of the saidAct, reduced the profits of industrial undertaking by an amount of Rs6,36,45,631/- on account of the fact that these service charges were treated asincome from other sources. However, before the Commissioner of Income-tax(Appeals), the appellant by way of an additional ground, reiterated its initialclaim that the receipt of Rs 6,36,45,631 on account of service charges constitutedpart of its profits and gains from an industrial undertaking and was eligible fordeduction under Section 80-I of the said Act. This claim of the appellant wasrejected by the Commissioner of Income-tax (Appeals), who held that the saidservice charges were not profits and gains derived by the assessee from itsindustrial manufacturing activities.It was held that the said service chargesreceived from the Heavy Water Board were not dependent upon the appellantsmanufacturing activities and, consequently, it was held that the service chargeswere not derived from the industrial undertaking of the appellant / assessee. 5.Being aggrieved, the appellant filed an appeal before the Income-taxAppellate Tribunal (hereinafter referred to as ‘the Tribunal’) which, by an orderdated 27.01.2006 upheld the view taken by the Commissioner of Income-tax(Appeals).Thereafter, the appellant preferred appeals before this court underSection 260-A of the said Act in respect of three years, including the assessmentyear 1993-94 and 1994-95.Those appeals were numbered as ITA Nos 1252-1254/2006.By an order dated 15.11.2006, a Division Bench of this courtdismissed those appeals holding that no substantial question of law arose for theconsideration of this court. 6.Being aggrieved by the order dated 15.11.2006 passed by a DivisionBench of this court, the appellant filed a Special Leave Petition [SLP (C) No.3802/2007]whichgotconvertedintoaCivilAppeal(CivilAppealNo.6244/2008). That appeal was disposed of by an order dated 21.10.2008. TheSupreme Court took the view that the Tribunal and the High Court had notexamined all the relevant contracts between the appellant and the Heavy WaterBoard because the appellant, in the first instance, had only produced theagreement dated 18.09.1994, but had failed to produce the contracts dated05.08.1986 and 11.07.1990.The Supreme Court felt that the said contractsneeded to be examined in depth in order to determine the basic issue as towhether the receipt of service charges was or was not directly linked with themanufacturing activities carried out and the industrial undertaking of theappellant.For this reason, while keeping all contentions from both sidesexpressly open, the Supreme Court set aside the impugned judgment of the DelhiHigh Court and remanded the matter to the Tribunal for reconsideration of thematter in accordance with law. 7.It is, thereafter, that the matter was reconsidered by the Tribunal whichdisposed of the appeal in respect of the assessment years 1993-94 being ITANo.6130/Del/1997 by an order dated 26.02.2010.It is that order which isimpugned before us insofar as the assessment year 1993-94 is concerned.Asimilar order was passed in respect of the assessment year 1994-95 in ITANo.3902/Del/2010 dated 20.10.2010. 8.The appellant has an Ammonia / Urea Plant at Hazira. Just next to it andwithin its premises, the Hazira Ammonia Extension Plan, which manufacturesheavy water, has been set up and established by the Heavy Water Board, which ispart of the Department of Atomic Energy, Government of India under the said agreements dated 05.08.1986, 11.07.1990 and 14.09.1994. After examining theagreements between the appellant and the Heavy Water Board, the Tribunal,which is the final fact finding authority in income-tax matters, has come to, interalia, the following conclusions:- “1.The ownership of the industrial undertaking for manufacture ofheavy water vests with the Government of India, Department ofAtomic Energy since inception and not with the appellant /assessee;heavy water vests with the Government of India, Department ofAtomic Energy since inception and not with the appellant /assessee; 2.The Heavy Water Plant belonging to the Heavy Water Boardand the Ammonia / Urea Plant of the assessee are bothintegrated with each other;and the Ammonia / Urea Plant of the assessee are bothintegrated with each other; 3.The process of manufacture of heavy water plant is dependenton the supply of synthesis gas which is enriched with deuteriumwhich is a by-product of Kribhco’s Ammonia / Urea plant.There are 10 pipe lines connecting Kribhco’s Ammonia / UreaPlant with the Heavy Water Plant.The Schematic Diagramshowing 10 pipe lines is as under:-on the supply of synthesis gas which is enriched with deuteriumwhich is a by-product of Kribhco’s Ammonia / Urea plant.There are 10 pipe lines connecting Kribhco’s Ammonia / UreaPlant with the Heavy Water Plant.The Schematic Diagramshowing 10 pipe lines is as under:- KRIBHCO-HEAVY WATER PLANT (HAEP)INTERCONNECTION LINEINTERCONNECTION LINE Heavy Water (HAEP) PLANT 12345678910AMMONIA PLANT - KRIBHCO 1. Syn Gas from AMMONIA PLANT to HAEP PLANT 3.The process of manufacture of heavy water plant is dependenton the supply of synthesis gas which is enriched with deuteriumwhich is a by-product of Kribhco’s Ammonia / Urea plant.There are 10 pipe lines connecting Kribhco’s Ammonia / UreaPlant with the Heavy Water Plant.The Schematic Diagramshowing 10 pipe lines is as under:-on the supply of synthesis gas which is enriched with deuteriumwhich is a by-product of Kribhco’s Ammonia / Urea plant.There are 10 pipe lines connecting Kribhco’s Ammonia / UreaPlant with the Heavy Water Plant.The Schematic Diagramshowing 10 pipe lines is as under:- KRIBHCO-HEAVY WATER PLANT (HAEP)INTERCONNECTION LINEINTERCONNECTION LINE Heavy Water (HAEP) PLANT 12345678910AMMONIA PLANT - KRIBHCO 1. Syn Gas from AMMONIA PLANT to HAEP PLANT 2. Dry Syn Gas from AMMONIA TO HAEP (Startup Line) 3. High pressure Steam from AMMONIA PLANT / POWERPLANT to HAEPPLANT to HAEP 4. DM Water from AMMONIA PLANT / DM PLANT toHAEPHAEP 5. Gaseous Nitrogent from OFFSITES PLANT (KRIBHCO)to HAEPto HAEP 6. Cooling Water makeup line from KRIBHCO to HAEP 7. Syn Gas return from HAEP to AMMONIA PLANT. 8. AMMONIA return from HAEP to AMMONIA PLANT. 9. FLASH Gas return from HAEP to AMMONIA PLANT. 10. Fire Water Line interconnection. It will be apparent from the above diagram that six pipe lines carryfeed-stock from the Ammonia Plant of Kribhco to the Heavy WaterPlant, which, inter alia, includes synthesis gas.Three pipe lines,namely, pipe lines shown at serial numbers 7, 8 and 9 show the returnof, inter alia, synthesis gas, after deuterium has been extractedtherefrom by the Heavy Water Plant. One pipe line, which has beenshown at S.No.10, is an interconnection of the Fire Water Line.Essentially, the manufacturing process is that synthesis gas enrichedwith deuterium, which is a by-product of the Ammonia / Urea Plantbelonging to the appellant is utilized by the Heavy Water Plant forthe purposes of extracting deuterium. The deuterium so extracted isused in the manufacture of Heavy Water at the Heavy Water Plant.The heavy water so produced is the property of the Heavy WaterBoard. Insofar as the synthesis gas is concerned, after deuterium isextracted from it, the same is returned to Kribhco’s Ammonia / UreaPlant; 4.The Heavy Water Plant cannot exist without the Ammonia / UreaPlant as the technology used for manufacture of heavy water is basedon Ammonia Hydrogen Exchange Mono-thermal process and thedeuterium required for manufacture of heavy water is supplied by theammonia / urea plant and is a by-product in manufacture of ammonia/ urea;Plant as the technology used for manufacture of heavy water is basedon Ammonia Hydrogen Exchange Mono-thermal process and thedeuterium required for manufacture of heavy water is supplied by theammonia / urea plant and is a by-product in manufacture of ammonia/ urea; 5.However, the Ammonia / Urea Plant is not dependent on the HeavyWater Plant as the Heavy Water Plant does not produce any by-product, which is necessary for manufacture of Ammonia / Urea. Inother words, the manufacture of Ammonia / Urea is not dependent onthe Heavy Water Plant;Water Plant as the Heavy Water Plant does not produce any by-product, which is necessary for manufacture of Ammonia / Urea. Inother words, the manufacture of Ammonia / Urea is not dependent onthe Heavy Water Plant; 6.The appellant had employed its staff for carrying out the operationand management of the Heavy Water Plant for which the appellantwas compensated by way of the said service charges;and management of the Heavy Water Plant for which the appellantwas compensated by way of the said service charges; 5.However, the Ammonia / Urea Plant is not dependent on the HeavyWater Plant as the Heavy Water Plant does not produce any by-product, which is necessary for manufacture of Ammonia / Urea. Inother words, the manufacture of Ammonia / Urea is not dependent onthe Heavy Water Plant;Water Plant as the Heavy Water Plant does not produce any by-product, which is necessary for manufacture of Ammonia / Urea. Inother words, the manufacture of Ammonia / Urea is not dependent onthe Heavy Water Plant; 6.The appellant had employed its staff for carrying out the operationand management of the Heavy Water Plant for which the appellantwas compensated by way of the said service charges;and management of the Heavy Water Plant for which the appellantwas compensated by way of the said service charges; 7.From the terms of the agreement entered into between the HeavyWater Board and the appellant for the operation and maintenance ofthe Heavy Water Plant, it is clear that Kribhco was not concernedwith the profit or loss which was to be incurred by the Heavy WaterBoard insofar as the Heavy Water Plant was concerned. The profit orloss arising from the operation of Heavy Water Plant was attributableto the Heavy Water Board and not to Kribhco;Water Board and the appellant for the operation and maintenance ofthe Heavy Water Plant, it is clear that Kribhco was not concernedwith the profit or loss which was to be incurred by the Heavy WaterBoard insofar as the Heavy Water Plant was concerned. The profit orloss arising from the operation of Heavy Water Plant was attributableto the Heavy Water Board and not to Kribhco; 8.Kribhco was concerned only with the service charges for operatingand managing the Heavy Water Plant and those service charges wereentirely dependent on the out-put of heavy water. In fact, the servicecharges were directly proportional to the quantum of heavy waterproduced at the Heavy Water Plant;and managing the Heavy Water Plant and those service charges wereentirely dependent on the out-put of heavy water. In fact, the servicecharges were directly proportional to the quantum of heavy waterproduced at the Heavy Water Plant; 9.Finally, the Tribunal concluded that the industrial undertakingmanufacturing heavy water was not a part of the Ammonia / UreaPlant of Kribhco, though it had been constructed in conjunction withthe Ammonia / Urea Plant of Kribhco.manufacturing heavy water was not a part of the Ammonia / UreaPlant of Kribhco, though it had been constructed in conjunction withthe Ammonia / Urea Plant of Kribhco. These are the findings of fact returned by the Income-tax Appellate Tribunal afterexamining the contracts between the Kribhco and the Heavy Water Board. Basedupon this, the question arose as to whether the service charges received foroperation and maintenance of the Heavy Water Plant could be said to be in thenature of profit and gains derived by Kribhco from an industrial undertaking soas to make it eligible for a deduction under Section 80-I of the said Act. TheTribunal, however, held that the service charges received by Kribhco from theHeavy Water Board could not be treated as having been derived from anindustrial undertaking of the assessee. The primary reason for rejecting the claimput forth by Kribhco was that the Tribunal felt that as Kribhco had no ownershipwith regard to the plant and machinery, building, etc. of the Heavy Water Plant,the service charges could not be treated as profit and gains derived from anindustrial undertaking “owned” by Kribhco. In fact, the Tribunal held that thesaid service charges were nothing but expenditure in the hands of the HeavyWater Board for manufacture of Heavy Water and, consequently, the said servicecharges received by Kribhco for the operation and management of the HeavyWater Plant was a step removed from the business of the industrial undertakingof the assessee, namely, the Ammonia / Urea Plant of Kribhco. The Tribunalheld that the said service charges for operation and maintenance could not be saidto be covered under the first degree of operations. 9.Mr Ganesh, senior advocate, appearing on behalf of the appellantsubmitted that the Tribunal had misconstrued the provisions of Section 80-I bybringing in the question of ownership of an industrial undertaking. He submittedthat Section 80-I(1) referred to the profits and gains derived from an industrialundertaking.Section 80-I(2) stipulated that the industrial undertaking shouldfulfill the conditions set out in that sub-section. It is nobody’s case that thoseconditions have not been satisfied. According to Mr Ganesh, neither Section 80- I(1) nor Section 80-I(2) of the said Act stipulates or requires that the industrialundertaking in question must be owned by the assessee. He sought to contrastthe provisions of Section 80-I(2) with those Section 80-I(3) which talks of theownership of the ship. Similarly, Section 80-I(4) also refers to the ownership ofthe hotel.However, there is no such requirement of ownership insofar as anindustrial undertaking is concerned. 10.It was also contended by Mr Ganesh that there could be no quarrel withthe proposition that the industrial undertaking must be the proximate andeffective source of the profits and gains. In this context, he submitted that in thepresent case, Kribhco had, in reality entered into a revenue sharing agreement orarrangement with the Heavy Water Board for sharing the revenues of the HeavyWater Plant. Furthermore, every single input required by the Heavy Water Plantwas supplied by Kribhco’s Ammonia / Urea Plant.Importantly, the servicecharges received by Kribhco for operating the Heavy Water Plant were entirelydependent on the actual quantum of heavy water produced by Kribhco in theHeavy Water Plant. It was, therefore, contended by Mr Ganesh that the real andeffective source of the service charge received by Kribhco was the Heavy WaterPlant, which, undoubtedly was an industrial undertaking.Consequently, hesubmitted, all the requirements of Section 80-I were fulfilled. He submitted thatthe question of ownership of the industrial undertaking was not a relevant factorand that Kribhco did not own the Heavy Water Plant. 11.Mr Ganesh advanced an alternative submission that the Heavy Water Plantwas nothing, but an extension of Kribhco’s Ammonia / Urea Plant. As such, theservice charges received by Kribhco could be considered as the profit or gainderived from Kribhco’s Hazira / Urea Plant which was, in any event, eligible fordeduction under Section 80-I of the said Act.In effect, what Mr Ganesh submitted was that, in the alternative, the Heavy Water Plant be regarded as apart of the appellant’s Ammonia / Urea Plant and, therefore, the service chargesreceived by the appellant would have to be regarded as profit or gains derivedfrom the said Ammonia / Urea Plant, which would include the Heavy WaterPlant. 12.Mr Rohit Madan (Senior Standing Counsel), appearing on behalf of therevenue, submitted that there was no error in the Tribunal’s order and that thequestion of law framed in these appeals ought to be decided in favour of therevenue and the appeals be dismissed.The learned counsel referred to theagreement dated 14.09.1994 entered into between Kribhco and the Heavy WaterBoard. He drew our attention, in particular to clauses 11 and 16 thereof. Clause11 of the said Agreement deals with the remuneration and it provides that inconsideration of Kribhco operating and maintaining the Heavy Water Plant, theHeavy Water Board, would pay to Kribhco, remuneration set out in Item-I,Schedule-I thereto. It also stipulates that the remuneration would be payable onlyas long as Kribhco continued to operate and maintain the Heavy Water Plant.We have already indicated that there is no dispute on this aspect of the matter thatKribhco was receiving service charges from the Heavy Water Board foroperating and maintaining the Heavy Water Plant. We have also indicated thatthese service charges were directly proportional to the quantum of Heavy Waterproduced in the Heavy Water Plant. 13.Our attention was drawn, as pointed out above, also to clause 16, whichspecifically provided that the Heavy Water Board shall be the owner of theHeavy Water Plant. There is also no dispute with this inasmuch as the Tribunalhas returned a finding of fact that the Heavy Water Plant belongs to the HeavyWater Board and not to Kribhco. The latter was only operating and maintaining the Heavy Water Plant on behalf of the Heavy Water Board for which it wasreceiving service charges. The question is whether these service charges couldbe treated as the profits and gains of Kribhco derived from an industrialundertaking and whether the same would be eligible for deduction under Section80-I of the said Act. 14.The learned counsel referred to the Supreme Court decision in the case ofPandian Chemicals Limited v. Commissioner of Income-tax: 262 ITR 278 (SC)278 to explain as to what is meant by the expression “derived from”, as appearingin Section 80-I of the said Act. In Pandian Chemicals (supra), it has been heldthat the words “derived from” in Section 80HH of the said Act must beunderstood as “something which has a direct or immediate nexus with theassessee’s industrial undertaking”. In that case, the assessee therein was requiredto make certain deposits with the Electricity Board for supply of electricity forrunning its industrial undertaking. Interest was earned on those deposits. Thecourt held that the interest so earned by the assessee on the said deposits couldnot be said to flow directly from the industrial undertaking itself and could not beregarded as profits and gains derived from an industrial undertaking for thepurposes of deduction under Section 80-HH of the said Act. The learned counselfor the revenue sought to draw an analogy, insofar as the present case wasconcerned. He submitted that the service charges received by Kribhco cannot besaid to be having a direct or immediate nexus with the industrial undertaking, thatis, the Heavy Water Plant. 15.The learned counsel for the revenue then referred to a decision of thiscourt in Commissioner of Income-tax v. Sona Koyo Steering Systems Limited:(2010) 321 ITR 463 (Delhi) in support of his contention that each industrialundertaking has to be taken independently for the purposes of computing deductions under Section 80-I of the said Act. He also placed reliance on anotherdecision of this court in Honda Siel Power Products Limited v. Commissioner ofIncome-tax: (2009) 318 ITR 309 (Delhi), to submit that the expression ‘derivedfrom’ was different and distinct from the expression “attributable to” and that theformer expression was narrower in scope than the latter expression.It wascontended that there must be an immediate and direct nexus to the essentialactivity of the industrial undertaking for any profit or gains therefrom to qualifyfor deduction under Section 80-I of the said Act. The learned counsel for therevenue also referred to the decision of the Supreme Court inLiberty India v. Commissioner of Income-tax: (2009) 317 ITR 218 (SC). In that decision, theSupreme Court, in the context of Section 80-IB, which, for our purposes, issimilar to Section 80-I, observed as under:- “14. … It is evident that section 80-IB provides for allowing ofdeduction in respect of profits and gains derived from theeligible business.The words “derived from” are narrower inconnotation as compared to the words “attributable to”.Inotherwords,byusingtheexpression“derivedfrom”,Parliament intended to cover sources not beyond the firstdegree. …” In this backdrop, it was contended that the “service charges were not within thefirst degree” and, therefore, could not be said to be derived from the industrialundertaking. 16.Consequently, the learned counsel for the revenue submitted that thequestion be answered in favour of the revenue and the appeals be dismissed. 17.Having considered the arguments advanced by the counsel for the parties,we feel that the key issue is whether the ownership of an industrial undertaking isa relevant factor for the purposes of construing the provisions of Section 80-I of In this backdrop, it was contended that the “service charges were not within thefirst degree” and, therefore, could not be said to be derived from the industrialundertaking. 16.Consequently, the learned counsel for the revenue submitted that thequestion be answered in favour of the revenue and the appeals be dismissed. 17.Having considered the arguments advanced by the counsel for the parties,we feel that the key issue is whether the ownership of an industrial undertaking isa relevant factor for the purposes of construing the provisions of Section 80-I of the said Act. We find ourselves to be in agreement with the submission made byMr Ganesh that Section 80-I does not speak of the ownership of an industrialundertaking. On a plain reading of Section 80-I(1) of the said Act, it is apparentthat the first question is – what is the gross total income of an assessee ? Thenext question is: does it include any profits or gains derived from an industrialundertaking ? Neither Section 80-I(1) nor Section 80-I(2) requires the fulfillmentof the condition that the industrial undertaking from which any profits or gainsare derived are to be owned by the assessee. No such condition of ownership caneven be inferred from the above provisions. In coming to this conclusion, we are,of course, not considering the provisions of Section 80-I(3) or 80-I(4), whichspeak of ownership of a ship and ownership of a hotel. We are not consideringthose provisions for the simple reason that even in those provisions, it does notstipulate that the ship or hotel should be owned by the assessee. It only stipulatesthat it should be owned by an Indian company or a company registered in India.Therefore, that distinction which Mr Ganesh had sought to make would not be ofmuch use.However, de hors the said alleged distinction, a plain reading ofSection 80-I(1) and 80-I(2) would indicate that the ownership by the assessee ofan industrial undertaking from which the assessee derives profits and gains is nota stipulated condition. The only thing that has to be seen is whether the source ofthe profit or gains is an industrial undertaking. In the present case, there is nodoubt and the revenue also does not contest it, that the Heavy Water Plant is anindustrial undertaking. Therefore, once the issue of ownership is out of the way,the only question that requires to be considered is whether the service chargesreceived by the appellant / Kribhco had a direct nexus with the industrialundertaking (that is, the Heavy Water Plant). If that were to be so, the source ofthe profit or gain would be in the first degree referred to in Liberty India (supra)and would fall within the expression “derived from”. We find that the servicecharges are directly relatable to the operation and management of the Heavy Water Plant, which is an industrial undertaking. The service charges are directlylinked to the quantum of heavy water produced by Kribhco by operating andmaintaining the Heavy Water Plant.Therefore, in our view, there is a directnexus between the service charges and the industrial undertaking. As such, weare of the view that the service charges are nothing but profits and gains derivedby Kribhco from the industrial undertaking (that is, the Heavy Water Plant) and,the ownership of the Heavy Water Plant is of no relevance. 18.We must also note that the object behind Section 80-I of the said Act is toencourage establishment of industrial undertakings.That object is clearlysatisfied in the present case.Section 80-I grants an incentive for promotingindustrialization and, as observed by the Supreme Court inBajaj Tempo Limited,Bombay v. the Commissioner of Income-tax, Bombay City-III, Bombay: 1992(3) SCC 78, “a provision in a taxing statute granting incentives for promotinggrowth and development should be construed liberally”.It is upon aconsideration of this aspect also that we have arrived at the conclusion that theservice charges received by Kribhco were profits and gains derived from anindustrial undertaking and were eligible for a deduction under Section 80-I of thesaid Act. 18.We must also note that the object behind Section 80-I of the said Act is toencourage establishment of industrial undertakings.That object is clearlysatisfied in the present case.Section 80-I grants an incentive for promotingindustrialization and, as observed by the Supreme Court inBajaj Tempo Limited,Bombay v. the Commissioner of Income-tax, Bombay City-III, Bombay: 1992(3) SCC 78, “a provision in a taxing statute granting incentives for promotinggrowth and development should be construed liberally”.It is upon aconsideration of this aspect also that we have arrived at the conclusion that theservice charges received by Kribhco were profits and gains derived from anindustrial undertaking and were eligible for a deduction under Section 80-I of thesaid Act. 19.Insofar as the decisions cited by the learned counsel for the revenue areconcerned, the said decisions do not, in any way, detract from the positionindicated by us. 20.Therefore, we feel that as the issue of ownership is irrelevant, the servicecharges received by Kribhco from the Heavy Water Board, would have to beregarded as profits or gains derived from an industrial undertaking so as toqualify for deduction under Section 80-I of the said Act. Because of the view we have taken, it is not necessary for us to examine the alternative plea advanced byMr Ganesh. 21.The question formulated is answered in the negative, in favour of theassessee and against the revenue. The impugned order is set aside. The appealsare allowed. BADAR DURREZ AHMED, ACJ R.V. EASWAR, JJuly 24, 2013dutt