TaxTMI 
TaxTMI 
2003 (3) TMI 319
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....92 and we restored this issue to the file of the Assessing Officer as per our observations in para 6 of the said order. Following the aforesaid order, we restore this issue to the file of the Assessing Officer and direct him to follow our directions in our aforesaid order and readjudicate upon the issue. 3. Ground No. 3 reads as under: "On the facts and in the circumstances of the case, the ld. CIT(A) has erred in law and on merit in not accepting the valuation of closing stock as done by the assessee and in revaluing the same: At the time of hearing, this ground was not pressed. The same is accordingly dismissed. 4. Ground No.4 reads as under: "Any other ground that the appellant may raise at the time of the hearing of the appeal." Obviously, this ground is general in nature and calls for no comments. 5. Vide letter dated 29-6-2001, the assessee raised the following two additional grounds: "(1) On the facts and in the circumstances of the case and in law and in the absence of any specific mention of the assessing authority in the assessment order charging interest under section 234B no interest could be recovered from the assessee merely by way of demand no....
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....ed by the Assessing Authority. (2) In the absence of any specific mention of the Assessing Authority in the assessment order charging interest under sections 234A and 234B, no interest could be recovered from the assessee merely by way of demand notice." The Hon'ble Supreme Court, vide its judgment in Ranchi Club Ltd.'s case has affirmed the above two judgments of the Hon'ble Patna High Court by stating, "We have heard learned counsel for the appellant. We find no merit in the appeals". The Hon'ble Supreme Court in the case of V.M. Salgaocar & Bros. (P.) Ltd. v. CIT [2000] 243 ITR 383, has held that when a Special Leave Petition is summarily dismissed under Article 136 of the Constitution, such dismissal would not lay down any law, rather it would be deemed that the Supreme Court had simply held that it was not a fit case where Special Leave Petition could be granted. It was further held that the same principle will not apply in a case where a Civil Appeal was dismissed by the Supreme Court holding that the appeal had no merit and when once the Civil appeal was dismissed after hearing the parties holding, that the appeal had no merit, then such order becomes one which attract....
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....r section 80-I/80-IA/80HHC include other income such as interest income and dividend income. The Assessing Officer observed that interest and dividend income are assessed to the income-tax under the head 'other sources' and therefore, cannot be termed as income derived from Profits and Gains of business. Moreover, the wording in section 80-I/80-IA are clear that only incomes 'derived from' an industrial undertaking are eligible to be considered while claiming deduction under section 80-I/80-IA Therefore, it was opined that the deductions under these sections are not available on the incomes discussed above. This view has been confirmed by the CIT(A) in assessee's own case for the assessment year 1990-91. This being the case, the deduction of the different units are calculated excluding interest and dividend income as under: ------------------------------------------------------------------------------- Name of the Unit Interest Dividend Total ------------------------------------------------------....
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....3. Assessee took up the matter in appeal and the ld. CIT(A) decided the issue against the assessee by following the decision of the CIT(A) for assessment year 1990-91, wherein the disallowance made by the Assessing Officer was confirmed. Therefore, deduction claimed under section 80-IA and disallowed by the Assessing Officer has further been confirmed by the learned CIT(A). 4. Against this order of the ld. CIT(A), the assessee is in further appeal and while relying upon the order of this Bench in the case of the assessee for assessment year 1991-92 in ITA No. 955/PN/1994 and C.O. No. 14/PN/1994 dated 6-12-2000 it was pleaded for allowing the deduction as claimed by the assessee, whereas the ld. D.R. distinguished the decision as taken by the Bench in the assessee's own case for earlier year and pleaded for confirmation of the impugned order. 5. After hearing both the sides, going through the orders of the authorities below and the Tribunal order in Departmental appeal and cross objection of the assessee in ITA No. 955/PN/1994 and C.O. No. 14/PN/1994, I find that the issue has been set aside on the file of the Assessing Officer with respect to deduction under section 80-I on i....
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.... 2 as this was covered by the latest decision of this Bench. But the learned A.M. vide his reply note showed his inability on the plea that the issue has rightly been set aside and restored back on the file of the Assessing Officer, keeping in view the facts of this particular case, and accordingly the ratio laid down in Vardhini Udyog's case which was later on passed, will not apply to this case. 7. The learned A.M. who is senior Member on the Bench has also not suggested in the said note for making a reference to the Special Bench. Both the notes are on record. Therefore, under the circumstances, I have no other alternative but to write my own order. 8. Now coming to the issue in hand about eligibility of interest income on fixed deposits with the bank in computation of deduction under section 80-IA, I find that the distinguishing feature of the earlier section 80S and the existing one is that earlier the expression 'profit attributable to priority industry' was on the statute book while in the existing provision Legislature has used expression "any profits and gains derived from industrial undertaking". The controversy had since been going on before the courts about the sc....
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....arameters as laid down by Their Lordships in various cases, Hon'ble Madras High Court in the case of CIT v. Pandian chemicals Ltd. [1998] 233 ITR 497 where issue before it was relating to claim of the assessee for deduction under section 80HH and the expression used is similar, concluded that assessee who had deposited the amount with State Electricity Board and earned interest such interest income cannot be said to have derived from industrial undertaking as immediate source of interest is the deposit and not business. Their Lordships of Hon'ble Madras High Court have further opined that mere fact that interest amount was assessable as business income itself would not be sufficient unless the source of profit is the undertaking. Therefore it was held that the assessee is not eligible to claim deduction and there were no compelling reasons to give wider meaning to the expression 'derived from' under section 80HH to cover every aspect. Further, it will be pertinent to mention that S.L.P. filed by assessee has since been rejected, as the intention of the Legislature was that industrial undertaking must be the source of the profits or gains Pandian Chemicals Ltd. v. CIT [SLP (Civil) N....
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....olex Pipes Ltd. v. Dy. CIT [2000] 68 TTJ (Pune) 422, for the reasons given in these orders, I uphold the action of the authorities below and held, that interest income is not eligible for deduction under section 80-IA as claimed by the assessee. It will be worth noting that when two views are there of co-equal strength of the Bench latest view is to be followed as held by the Hon'ble Delhi High Court in the case of Bhika Ram v. Union of India [1999] 238 ITR 113 and the relevant portion is reproduced as below: "However, learned counsel for the petitioner relied on Satinder Singh v. Umrao Singh AIR 1961 SC 908, to submit that compensation would not be treated as income. Ld. counsel further submitted that the decision of the Supreme Court in Satinder Singh s case AIR 1961 SC 908 was not brought to the notice of the Supreme Court when Bikram Singh's case [1997] 223 ITR 551, was decided. It is also submitted that the reasoning on which Their Lordships have proceeded in the case of Satinder Singh, was also not argued before the Supreme Court in Bikram Singh's case. Not only are we not satisfied about the correctness of the submission so made, we are also of the opinion that such a ple....
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....whether F.D.Rs. were for business expediency and to follow the decision in the case of Jagdish Electronics (P.) Ltd. [1998] 66 ITD 542, is justified." THIRD MEMBER ORDER Per Shri M.K. Chaturvedi, Vice President.--This appeal came before me as a Third Member to express my opinion on the following question:-- "Whether, action in holding that interest income on FDRs is not eligible for deduction under section 80-IA and for that purpose, gross interest is excludible, is justified or action in setting aside the issue and restoring it back to the Assessing Officer for determining whether FDRs were for business expediency and to follow the decision in the case of Jagdish Electronics (P.) Ltd. [1998] 66 ITD 542, is justified." 2. I have heard the rival submissions in the light of material placed before me and precedents relied upon. I find that the learned Accountant Member, in the case of Vardhini Vdyog, did not follow the view expressed by the Pune Bench in the case of Jagdish Electronics (P.) Ltd. The relevant Para is reproduced here as under: "...So far as the reliance placed by the assessee on the decisions of Pune Bench of the Tribunal in the case of Jagdish E....