Transport subsidy not treated as profits derived from an industrial undertaking for Section 80-IA deduction.

Transport subsidy received under a government scheme does not qualify as profits "derived from" an industrial undertaking for deduction under Section 80-IA. The expression "derived from" requires a direct and immediate nexus between the income and the undertaking, and is narrower than "attributable to". Because the subsidy originated in an external Central Government incentive scheme and merely reimbursed transport costs in remote areas, it was not operational profit generated by the business and was therefore ineligible for deduction.

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Issues: Whether transport subsidy received under a government scheme can be treated as profits derived from the industrial undertaking for the purpose of deduction under Section 80-IA of the Income-tax Act, 1961.

Analysis: The expression "derived from" has a narrower meaning than "attributable to" and requires a direct nexus between the profits and the industrial undertaking. Applying the principles laid down in the decisions dealing with export incentives, duty drawback, import entitlements, and similar receipts, the source of the transport subsidy was the Central Government scheme and not the industrial undertaking itself. The subsidy was therefore not an operational profit generated by the business, but an incentive granted externally to recoup transport costs in remote areas.

Conclusion: Transport subsidy is not profits derived from the industrial undertaking and is not eligible for deduction under Section 80-IA.

Ratio Decidendi: For profit-linked deductions, only income having the industrial undertaking as its direct and immediate source qualifies as profits "derived from" the undertaking; receipts flowing from a incentive scheme do not satisfy that test.

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