The Deduction Under Both The Aforesaid Heads Under Section80Ia Of The Act Was Disallowed By The Impugned Order Of The Tribunal.it Followed The Decision Of The A v. Pandian Chemicals Ltd. 318 Itr 420 Which Has Held That Thewords 'Derived From' Means Something Which Has Direct And Immediatenexus With The Industrial Undertaki

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 415 OF 2004 M/s. Tema Exchangers Manufactures Pvt. Ltd. .. Appellant v/s. The Asstt. Commissioner of Income Tax-10(2)Mumbai & Anr. ..Respondents Mr. M. Subramanian I/b V.S. Hadade for the appellantMr. Tejveer Singh for the respondent CORAM : M.S. SANKLECHA & SANDEEP K. SHINDE, J.J. P.C. DATED : 18[th] JULY, 2018. 1.This appeal under Section 260A of the Income Tax Act, 1961 (theAct) was admitted on 18[th] July, 2006 on the following substantialquestions of law :- (a)On the facts and in the circumstances of the case, whether theIncome-tax Appellate Tribunal was right in law in reversing theorder of the CIT(A) and restoring that of the Respondent No.1 andthereby denying the appellant the benefit of Section 80IA of the I.T.Act, in respect of interest income of Rs.6,69,573/-? (b)On the facts and in the circumstances of the case, whether theIncome-tax Appellate Tribunal was right in law in reversing theorder of CIT(A) and restoring that of the Respondent No.1 thereby denying the appellant the benefit of Section 80IA of the I.T. Act, inrespect of compensation income of Rs.98,215/-? 2.The impugned order of the Tribunal allowed the respondentRevenue's appeal by holding that the appellant would not be entitled todeduction under Section 80IA of the Act in respect of the followingincome :- The interest is earned on fixed deposits and compensation has been received on account of non-supply of spare parts by the supplierfor running of the industrial undertaking. 3.The deduction under both the aforesaid heads under Section80IA of the Act was disallowed by the impugned order of the Tribunal.It followed the decision of the Apex Court in Commissioner of IncomeTax Vs. Pandian Chemicals Ltd. 318 ITR 420 which has held that thewords 'derived from' means something which has direct and immediatenexus with the industrial undertaking. Thus, the claim for deduction on the above heads was disallowed under Section 80IA of the Act. 4.Mr. Subramaniam, learned Counsel appearing in support of the appeal points out that Pandian Chemicals Ltd. (supra) was rendered inthe context of Section 80HH of the Act and we are concerned withSection 80IA of the Act. It is particularly pointed out that there is adifference in the wording of the two sections as existing during theprevious year relevant to the subject assessment year. Section 80HHof the Act grants deduction in respect of the profits and gains derivedfrom industrial undertaking while Section 80IA of the Act as in force atthe relevant time grants deduction of profits and gains derived from anybusiness of an industrial undertaking. It is submitted that the aboveissue is no longer res integra as the issue stand concluded in its favourby the decision of this Court in Commissioner of Income Tax Vs.Jagdishprasad M. Joshi, 318 ITR 420. 5.We find that this Court in Jagdishprasad M. Joshi (supra), thequestion which was posed for our consideration was as under :- “Whether on the facts and in the circumstances of the case and inlaw, the Tribunal was right in allowing the appeal of the assesseeholding that the interest income earned by the assessee on fixeddeposits with the bank and other interest income are eligible fordeduction under Section 80IA of the Income Tax Act, 1961?” 6.This Court answered the question in the affirmative while 5.We find that this Court in Jagdishprasad M. Joshi (supra), thequestion which was posed for our consideration was as under :- “Whether on the facts and in the circumstances of the case and inlaw, the Tribunal was right in allowing the appeal of the assesseeholding that the interest income earned by the assessee on fixeddeposits with the bank and other interest income are eligible fordeduction under Section 80IA of the Income Tax Act, 1961?” 6.This Court answered the question in the affirmative while dismissing the Revenue's appeal. This by holding that income earnedby the assessee on the fixed deposit from the bank has to be extendeddeductions under Section 80IA of the Act. In support of the above, thisCourt relied upon the decision of the Delhi High Court inCommissioner of Income Tax Vs. Eltek SGS P. Ltd., 300 ITR 06wherein the difference in the language employed in Sections 80IB and80HH of the Act was brought out i.e. “profits and gains derived fromindustrial undertakings” as found in Section 80HH of the Act with“profits and gains derived from any business of an industrialundertakings”. In view of the difference in language of the twoSections, this Court held that interest on fixed deposits in the bankwould be profits and gains derived from any business of an industrialundertaking. The same reasoning would apply to extend deductionsunder Section 80IA of the Act for the compensation received for nonsupply of spare parts. Thus, the issue stands concluded in favour of theappellant assessee by the decision of this Court in Jagdishprasad M.Joshi (supra). 7.Mr. Tejveer Singh, learned Counsel for the Revenue is unable topoints out why the aforesaid decision in the case of Jagdishprasad M.Joshi (supra) would not apply to the present facts. 8.In the above view, both the questions of law are answered in thenegative i.e. in favour of the appellant assessee and against therespondent Revenue. 9.Accordingly, the appeal is allowed. (SANDEEP K. SHINDE J.) (M.S. SANKLECHA, J.)