TaxTMI 
TaxTMI 
2001 (7) TMI 277
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....pleted under section 143(l) was set aside by CIT under section 263, on the ground whether interest received from fixed deposit could be attributed and the business activities of the assessce and if the investment had been made in the course of and for the purpose of the business. As such, the order was set under sections 263 to reconsider the point for entitlement of deductions under section 80HH for the assessment year 1987-1988 and under section 32AB and 80-I for the assessment years 1988-1989 and 1990-1991. Before the Assessing Officer, it was contended by the assessee that fixed deposit along with interest thereon has been utilised for the purpose of industrial activities of the assessee's company. A certificate from the United Bank of India was also filed which showed that the assessee-company had a fixed deposit with the Bank which had been credited out of mobilising advance received from State Electricity Department against Bank guarantee. The Assessing Officer declined assessee's claim by observeing that deduct" under section WHH/80-I is allowable on the income derived from 'Industrial Undertaking' only and deduction under section 32AB is allowable on the income derived fro....
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....es (P.) Ltd. v. Dy. CIT [1999] 64 TTJ (Pune) 839; (iii) Snam Progetti &PA. v. Addl CIT [1981] 132 ITR 70 (Delhi); (iv) Pink Star v. Dy. CIT [2000] 66 TTJ (Mum.) 885; (v) CIT v. Bokaro Steel Ltd [1999] 151 CTR (SC) 276, (vi) CIT v. Tamil Nadu Dairy Development Corpn. Ltd [1995] 216 ITR 535 (Mad.); (vii) CIT v. Calcutta National Bank Ltd. [1959) 37 ITR 171 (SC); (viii) CIT v. K.S. Kannan Kunhi [1973] 87 ITR 395 (SC); (ix) M. Tomba Singh v. ITO [1979] 8 TTJ (Gauhati) 225. 5. On the other hand, the Id. Departmental Representative strongly objected to the arguments put forward by the Id. A.R. He further placed strong reliance on the order of the Assessing Officer and reliance was also placed on the following decsion - . (i) North East Gases (P.) Ltd v. CIT [1996] 220 ITR 372 (Gauhati), (ii) CIT v. Sterling Foods [1999] 237 ITR 579 (SC); (iii) Tuticorin Alkali Chemicals & Fertilizers Ltd v. CIT [1997] 227 ITR 172 (SC). 6. We have heard and considered the rival submission perused the material facts on record. We have also perused the various case laws relied upon by both the parties. The main thrust of the issue is that in order to be eligible source of....
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....rest paid on overdraft is more than interest received on FDRs. All the above deposits were, made out of advances received in the course of business of manufacturing towers from State Electricity Board. The interest earned on the deposit had also been ploughed back into Bank account and utilised for the purpose of the business. A certificate from the Bank to above effect was also procured by the Assessing Officer during the course of assessment. The Assessing Officer has not brought any material on record to controvert the above facts. Even for a moment, if it is assumed that fixed deposit had been adjusted against the overdraft, the net effect on the profit of industrial undertaking would have remain more or less same because in all the years interest paid on overdraft facility availed against security of fixed deposit, is more than the interest received on FDR except the assessment year 1988-89. The Assessing Officer also failed to bring any material on record that Bank guarantee availed against the fixed deposit was not required to be furnished by the assessee nor that Bank guarantee, was available to the assessee without offering any fixed deposit as a security to the Bank....
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.... ITR 252 observed that where the company utilised its commercial assets which were lying in the form of surplus cash, for earning interest, the interest arises from the utilisations of commercial assets only and would, therefore, be business income. Madras ITAT in Ambika Cotton Mills Ltd v. Joint CIT [2001] 71 TTJ 871, observed that interest earned with reference to deposit and guarantees given to the Electricity Board for providing the assessee necessary power for running its factory, is eligible for deductions under sections 80HH and 80-I. Let us now examine the ratio of decisions relied on by ld, D.R. Jurisdictional Gauhati High Court in case of North East Gases (P.) Ltd. held that interest on Bank deposit and profit on sale of fixed assets earned by new industrial undertaking did not come within the scope of .profits and gains of business' but under the head "Income from other sources'. In this case, there was no nexus between the making of fixed deposit and activity of industrial undertaking. No bank guarantee nor overdraft limit was sought in this case. Whereas in the instant case fixed deposit was given for availing-Bank guarantee and overdraft limit there against. Without o....