2003 (6) TMI 198

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....ent petition that the view taken by the Tribunal holding that the assessee is entitled for exemption in respect of certain interest incomes is erroneous. The interest incomes in question are said to be the following- (a) Interest on deposit towards bank guarantee money     in favour of Central Excise & Customs Department       Rs. 6,484 (b) Interest on deposit with APSEB                         Rs. 3,190 It is mentioned that the SLP filed by the assessee against the decision of the Hon'ble Madras High Court in the case of CIT v. Pandian Chemicals Ltd. [1998] 233 ITR ....

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.... that the Apex Court has decided the issue in favour of the Revenue, videits judgment dated 24th April, 2003 in Civil Appeal No. 3220 of 2000. In that decision, the Hon'ble Supreme Court observed as under:- "4. Section 80HH of the Income-tax Act grants deduction in respect of profits and gains "derived from" an industrial undertaking. The contention of the appellant before us is that interest earned on the deposit made with the Electricity Board for the supply of electricity to the appellant's industrial undertaking should be treated as income derived from the industrial undertaking within the meaning of section 80HH. It is submitted that without the supply of electricity the industrial undertaking could not run and since electricity was....

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.... Its use in the definition indeed demands an enquiry into the genealogy of the product. But the enquiry should stop as soon as the effective source is discovered. In the genealogical tree of the interest land indeed appears in the second degree, but the immediate and effective source is rent, which has suffered the accident of non-payment. And rent is not land within the meaning of the definition." This definition was approved and reiterated in 1955 by a Constitution Bench in this Court in the decision of Mrs. Bacha F. Guzdar v. CIT [1955] 27 ITR 1. It is clear, therefore, that the word 'derived from' in section 80HH of the Income-tax Act, 1961 must be understood as something which has direct or immediate nexus with the appellant's indus....