Section 80IB deduction excludes income-tax refund interest lacking direct nexus with industrial undertaking profits.

Interest received on an income-tax refund is not profit or gain "derived" from the eligible industrial undertaking for purposes of Section 80IB. The required direct nexus with the manufacturing or business activity is absent because the receipt arises from excess tax collection and the refund dispute, not from the undertaking's operations. On that reasoning, such interest is outside the deduction provision and cannot be claimed as eligible income under Section 80IB.

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Issues: Whether interest received from the Income Tax Department on refund of excess tax paid is eligible for deduction under Section 80IB of the Income-tax Act, 1961.

Analysis: Section 80IB allows deduction only in respect of profits and gains derived from the eligible industrial undertaking. The interest received on refund of excess tax is not generated from the manufacturing business of the assessee, nor is it directly connected with the industrial activity. The expression "derived" connotes a direct nexus with the business activity, which is absent in respect of interest paid on tax refund. The receipt arose from the dispute and excess collection of tax, and not from the undertaking's business operations.

Conclusion: The interest on income tax refund is not eligible for deduction under Section 80IB and the disallowance was .

Ratio Decidendi: Deduction under Section 80IB is confined to profits and gains directly derived from the eligible industrial undertaking, and interest received on income-tax refund does not satisfy that requirement.

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