TaxTMI 
TaxTMI 
2010 (4) TMI 229
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....ion 80-IB on the said interest income without appreciating that said income is not "derived from" manufacturing ? (2) Whether on the facts and circumstances and in law, the Tribunal was right in upholding the order of the Commissioner of Income-tax (Appeals) that the Assessing Officer cannot deduct the income under the head 'Interest' of Rs. 4,36,372 from the business income for the purposes of computation of deduction under section 80-IB ?" 2. The appeal arises out of an order passed by the Tribunal on June 15, 2009 and it relates to assessment year 2000-01. Each of the two questions would be considered separately. Question No. 1 3. The assessee claimed a deduction under section 80-IB. The assessee is engaged in the business of manufa....
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....m such profits and gains to the extent and for the assessment years as specified in the section. For the purpose of the provision, what needs to be emphasised is that profits must be derived from the eligible business. As construed by the Supreme Court in Liberty India v. CIT [2009] 317 ITR 218, the expression "derived from" is narrower as compared to the words "attributable to" and Parliament intended to cover sources not beyond the first degree. 5. In the present case, the explanation which was furnished by the assessee to the Assessing Officer has been adverted to in the order passed on November 28, 2006 under section 143(3) read with 147. The correctness and veracity of the explanation has not been doubted, either in the proceeding bef....
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....the assessee. The Assessing Officer held that the interest received cannot be held to constitute profits and gains derived from the industrial undertaking. The assessee was found to have parked surplus funds with a specific aim of earning interest thereon and it was consequently held that the interest received as such, had no direct link with the profits and gains derived from the industrial undertaking. The Commissioner (Appeals), however, held that the interest income of Rs. 4,36,372 cannot be reduced from the business income while computing the income under section 80-IB. What weighed with the Com-missioner (Appeals) is that the loans/advances had not been given by the assessee out of interest free capital and that against a receipt of R....