1999 (9) TMI 125

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....,191 was part of profits and gains derived from the industrial undertaking for purposes of deduction under s. 80-I. 3.2 That the CIT(A) erred on facts and in law in observing inter alia, that the source referable to the aforesaid receipts was not the business of the undertaking." 3. In regard to the first ground, we have heard the rival submissions. The AO disallowed Rs. 2,19,745 as prior period expenses. Before the CIT(A) the assessee objected to these disallowances of the following amounts only:                                        Rs. (a) Job work expenses                  17,550 (b) White-washing expenses             22,150 (c) Repairs                            10,041 (d) Excise duty &nbs....

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....6) 130 CTR (Bom) 348 : (1995) 212 ITR 175 (Bom), and United Catelists vs. CIT (1997) 140 CTR (Ker) 55 : (1998) 229 ITR 233 (Ker). 9. Having regard to the recent trend of the judgments in the context of allowability of claim under s. 37(4) we are not inclined to accept the contention raised on behalf of the assessee. Accordingly, we decide this issue in favour of the Revenue and against the assessee. 10. Coming now to the last ground, we find that the assessee claimed deduction under s. 80-I of the IT Act, 1961 aggregating to Rs. 28,22,525. The AO restricted the deduction to Rs. 25,41,948 after reducing a sum of Rs. 2,80,577 being 25 per cent of Rs. 11,22,207 being the other income included in the P&L a/c. The details of other income were submitted as under:                                          Rs         Rs "1. (a) Interest from employees        6,153.25     (b) Interest from HS....

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....p;                  8,49,847.00 4. Liabilities no longer required    written back                                   46,842.00 5. Profit/loss on sales of fixed    assets (Typewriters)                            4,156.00                                                -------------                                       TOTAL    11,22,307.00" ....

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..... vs. CIT (1997) 138 CTR (SC) 287 : (1997) 224 ITR 122 (SC), the assessee was manufacturer of trucks in collaboration with foreign company. There was phased programme for manufacture of spare parts. Because the purchasers experience difficulty in procuring spare parts the assessee imported spare parts to meet the demand. The question before the apex Court was whether the profit from the sale of imported spare parts can be attributed to the priority industry. The Hon'ble Supreme Court has held that the activity of sale of imported parts was intimately connected with the priority industry set up and run by the assessee. The assessee was, therefore, entitled to relief under s. 80E and 80-I of the Act. 14. In the case of CIT vs. Sterling Foods (1999) 153 CTR (SC) 439 : (1999) 237 ITR 579 (SC), the assessee derived profits from the sale of import entitlement. Apex Court has held that these are not profits derived from industrial undertaking. The word "derive" is usually followed from the word "from" and it means: "get, to trace from a source; arise from, originate, show to origin or formation of". The source of import entitlements could not be said to be the industrial undertaking of....