Commissioner of Income Tax vs Pondicherry Distilleries Ltd.

N.V. Balasubramanian, J.—At the instance of the Department, the following common question of law has been referred to us for the

assessment years 1976-77, 1978-79, 1979-80 and 1980-81 for our consideration u/s 256(1) of the Income Tax Act, 1961 :

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in treating the interest receipts from fixed deposits

held in banks as profits and gains derived from an industrial undertaking for the purpose of Section 80HH of the Income Tax Act, 1961 ?

It is not disputed that a similar question of law was considered by a Division Bench of this court in Tax Case No. 1353 of 1985, dated April 29,

1997 ( Commissioner of Income Tax Vs. Pandian Chemicals Ltd., wherein it was held that the assessee is not entitled to claim deduction u/s

80HH of the Income Tax Act in respect of the interest receipts from fixed deposits held by the assessee in banks as it cannot be said that interest

income was derived from an industrial undertaking and the immediate source of the interest is the bank deposit and not the industrial undertaking

making it ineligible to claim the deduction u/s 80HH of the Act.

Following the above said decision, we answer the common question of law referred to us for all the assessment years in the negative, in favour

of the Revenue and against the assessee. However, in the circumstances of the case, there will be no order as to costs.