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1 - 10 of 12 (0.35 seconds)Section 84 in The Income Tax Act, 1961 [Entire Act]
Section 80I in The Income Tax Act, 1961 [Entire Act]
Cambay Electric Supply Industrial Co. ... vs The Commissioner Of Income Tax, ... on 11 April, 1978
In the Supreme Court decision in Cambay Electric Supply Industrial Co. Ltd.'s case (supra), the question arose as to whether the balancing charge under Section 41(2) of the Indian Income-tax Act, 1922, could be held to be part of the profits and gains of business of generation and distribution of electricity of the assessee. It is in this context that their Lordships considered the two expressions 'attributable to' and 'derived from'. It is to be seen that Section 80E of the Act considered in that decision provided for relief by way of deduction in respect of profits and gains attributable to the business of generation and distribution of electricity or any other form of power, etc. The expression used is 'profits and gains attributable to the business of.... Now there is a distinction between this expression and the expression used in Section 80HH. Section 80HH speaks in the first part thereof of any profits and gains derived from an industrial undertaking. It is to be noted that the same section also refers to the business of a hotel in the later part. Again, Section 80HHB of the Act providing for deduction in respect of profits and gains from projects outside India speaks of 'any profits and gains derived from the business of.... In Section 80HHA of the Act relief is contemplated in respect of profits and gains derived from a small scale industrial undertaking, etc. Section 80-I again provides for relief in respect of any profits and gains derived from an industrial undertaking, etc. Therefore, two distinct and different expressions are apparently deliberately used. There is no definition of 'industrial undertaking' in the provisions of the Act, though there is one with regard to small scale industrial undertaking. Therefore, the expression 'industrial undertaking' has to be given the normal meaning. The term 'undertaking', according to us, envisages not only the activity of manufacture or production of goods or articles but the entire set up including all the paraphernalia, the various assets, liabilities, i.e., the entire set up with which the business of manufacture or production of goods is carried on. Therefore, cash resources not immediately flowed back in the day to day operations, but nonetheless forming part of the undertaking is also a constituent part of the undertaking. When thus viewed, it is obvious that the income generated by way of interest on deposits of money held as part of the industrial undertaking is nothing but an ingredient of the profits and gains derived from such undertaking. It does not make any difference as to whether any such item of income is assessed under the head 'Profits and gains of business or profession' or under the head 'Income from other sources'. The fact remains that it is income derived from the industrial undertaking and it is comprehended by the expression 'profits and gains of the undertaking' and it need not necessarily arise by way of any surplus arising from purchase and sale of any commodity or article or by way of excess of the sale price over the cost of any such article or commodity. We are, therefore, satisfied that even if the interest income derived by the assessee cannot be strictly referable to the business or activity of manufacture of liquor and has no direct nexus thereto, it can still be regarded as profit or gain derived from the undertaking as a whole. Every income, profit or gain to be derived from the undertaking need not necessarily be directly relatable to the operation of manufacture and sale of the particular commodity or articles dealt in by the assessee. If, for instance, the assessee receives money by way of interest on the delayed payment of the sale price from the customers of goods supplied by it, could it be said that such interest does not arise by way of profits and gains of the business undertaking of the assessee ? In our view, it will be certainly referable to the business undertaking carried on by the assessee and, therefore, eligible to whatever relief the other profit directly attributable to the manufacturing operations are eligible. For all the reasons considered above, we uphold the assessee's claim and direct deduction under Section 80HH on the amount derived by it by way of fixed deposits in this case.
Commissioner Of Income-Tax vs Sutna Stone & Lime Co. Ltd. on 12 May, 1981
The learned departmental representative argued that there is a distinction between the expressions 'derived from' and 'attributable to' and also cited two decisions, one of the Supreme Court in Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 and the other of the Calcutta High Court in CIT v. Sutna Stone & Lime Co. Ltd. [1982] 138' ITR 37. In the Calcutta High Court decision it was held that the expression 'attributable to' in Section 80-I of the Act has a wider meaning than the expression 'derived from'. It was also argued by the learned departmental representative with reference to this decision that in order to be entitled to the exemption claimed, the assessee must strictly come within the terms of the provisions providing for exemption.
Section 80E in The Income Tax Act, 1961 [Entire Act]
Phillips Carbon Block Ltd. vs Commissioner Of Income-Tax, Central on 11 August, 1981
In the decision of the Calcutta High Court in Phillips Carbon Block Ltd.'s case (supra), the point that arose for consideration was whether the bank deposit was includible in computing the capital of the assessee for the purpose of determining relief under Section 84 of the Act. It was found in that case that the amounts held in deposit, with the bank were part of the circulating capital and were intended to meet the tax liability. It was further noticed in that case that there is no finding that there was any separate business carried on by the assessee or that the assessee had any other unit apart from and distinct from the new undertaking. It was held that notwithstanding the fact that the interest earned was assessed under the head 'Income from other sources', the moneys were entitled to be taken into account for computation of capital employed in the industrial undertaking for the purpose of relief under Section 84.
Section 80HHA in The Income Tax Act, 1961 [Entire Act]
Section 80HHB in The Income Tax Act, 1961 [Entire Act]
J.K. (Bombay) (P) Ltd vs New Kaiser-I-Hind Spg. & Wvg. Co. Ltd. & ... on 22 November, 1968
Ltd.'s case (supra). In that case interest earned on deposits in a bank by a shipping company was held to be incidental to the main purpose of deposit which was safe-keeping and not earning of profit. In that case it was claimed on behalf of the company that the interest constituted business income because one of the objects of the company was to lend money and invest and deal with money. It was held that such a contention was not raised and the investment, as found by the Commissioner, was only to secure the money which was lying idle. In our view, the ratio of the decision will not be applicable to the present case because the facts found and the contentions raised were somewhat different. In the present case before us it is not that the money was deposited for safe-keeping or securing it. The money was kept back for the purpose of utilisation in the projects or expansion of the business undertaking of the assessee as and when occasion arise and as it was likely to take same time, it was considered prudent to make it grow meanwhile by the amount of interest earned on fixed deposit which was one of the prudent ways of holding the funds of the undertaking profitably. In such a situation the interest earned should, in our view, be held to arise in the course of the carrying on of the business of the undertaking of the assessee and incidental thereto. Indeed, the learned departmental representative did not dispute that the amount of accumulated profits held over represent the funds of the undertaking not immediately required but his contention is that the interest earned thereon cannot be regarded as profits and gains derived from the industrial undertaking as envisaged by Section 80HH. Before we deal with this contention, we may consider the provisions of Section 80HH. This section states that where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking ... , to which this section applies, there shall, in accordance with and subject to the provisions of this section be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to 20 per cent thereof. Sub-section (2) stipulates the conditions for being eligible to the relief. It is not material for us to consider this as it is undisputed that the assessee is entitled to the relief under Section 80HH, the only controversy being as to the quantum of such relief. Now it may be seen that the section provides for relief by way of deduction in respect of any profits and gains derived from an industrial undertaking.