Commissioner of Income Tax vs Jagdishprasad M. Joshi

Heard the learned Counsel for the appellant and the learned Counsel for the respondent. In the above appeals, the following substantial question of law arises:

Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in allowing the appeal of the assessee holding that the interest income earned by the assessee on fixed deposits with the bank and other interest income are eligible for deduction u/s 80-IA of the income tax Act, 1961?

Perused the judgment of the learned income tax Appellate Tribunal wherein it is observed as under:

The very same issue was considered by the income tax Appellate Tribunal, Mumbai ''G'' Bench in the assessee''s own case for the immediately preceding the assessment year 1997-98 in I. T. A. No. 3569/M/2001 through their order dated September 13, 2004. After considering the facts and features of the case and also considering the decision of the Supreme Court in the case of Pandian Chemicals Ltd. Vs. Commissioner of Income Tax, , the Tribunal has held that the interest income earned by the assessee was in the nature of business income and should be considered as part of business profit for the purpose of granting deduction u/s 80IA. We find that this issue stands fully covered by the said order in favour of the assessee. Accordingly, we direct the assessing authority to include the interest income also as part of the assessee''s business income for granting relief u/s 80IA.

Mr. Suresh Kumar, learned Counsel for the appellant, strongly relied upon the judgment of the Supreme Court in the case of Pandian Chemicals Ltd. Vs. Commissioner of Income Tax, and also the judgment of the Madras High Court in the case of Commissioner of Income Tax Vs. Pandian Chemicals Ltd., .

However, Mr. Murlidhar, learned Counsel appearing on behalf of the respondent, strongly relied on the judgment of the Delhi High Court in the case of The Commissioner of Income Tax Vs. Eltek SGS (P) Ltd., wherein the Delhi High Court has in fact considered the very same issue, and also the judgment relied upon by the Revenue and has clearly distinguished the language employed under Sections 80IB and 80HH and has observed as under (pages 9, 10):

That apart, Section 80IB of the Act does not use the expression ''profits and gains derived from an industrial undertaking'' as used in Section 80HH of the Act but uses the expression ''profits and gains derived from any business referred to in sub-section'' ...

A perusal of the above would show that there is a material difference between the language used in Section 80HH of the Act and Section 80IB of the Act. While Section 80HH requires that the profits and gains should be derived from the industrial undertaking, Section 80IB of the Act requires that the profits and gains should be derived from any business of the industrial undertaking. In other words, there need not necessarily be a direct nexus between the activity of an industrial undertaking and the profits and gains.

Learned Counsel for the Revenue also drew our attention to Pandian Chemicals Ltd. Vs. Commissioner of Income Tax, . However, on a reading of the judgment we find that that also deals with Section 80HH of the Act and does not lay down any principle difference from Sterling Foods Commissioner of Income Tax, Karnataka Vs. Sterling Foods, Mangalore, . In fact, in Pandian Chemicals Ltd. Vs. Commissioner of Income Tax, reliance has been placed on Cambay Electric Supply Industrial Co. Ltd. Vs. The Commissioner of Income Tax, Gujarat-II, Ahmedabad, and the decision seems to suggest, as we have held above, that the expression ''derived from an industrial undertaking'' is a step removed from the business of the industrial undertaking.

Having regard to the aforesaid judgments we are not inclined to entertain the above appeals, as there is no substantial question of law involved in both the appeals. In the result, both the appeals stand dismissed.