TaxTMI 
TaxTMI 
2010 (11) TMI 340
X X X X Extracts X X X X
X X X X Extracts X X X X
.... under:- "(1)Whether on the facts and in the circumstances of the case the Appellate Tribunal was right in law in holding that the earning of interest income from Bank deposits will have to be treated as business income ? (2)Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that there was nexus between the deposits made and the business and therefore, interest earned on the deposits was part of the industrial undertaking ?" 3.The revenue has come forward with these appeals. Challenge is to the order of the Appellate Tribunal "C" Bench, Chennai dated 17.07.2003 passed in I.T.A.Nos.1518 to 1520/1995. Assessment years are 1989-90; 1990-91; 1991-92. 4.Brief fa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsel placed reliance upon the decision of Division Bench of this Court reported in 233 [98] ITR 497, Commissioner of Income tax vs. Pandian Chemicals Ltd. It was also confirmed by the Supreme Court in the decision reported in 262 (2003) ITR 278 [Pandian Chemicals Ltd. vs. CIT] and a recent decision of the Hon'ble Supreme Court reported in 2009 (3) ITR 218 [Liberty India vs. C.I.T.]. 6.To appreciate the contention of the learned Standing Counsel, we deem it fit and proper to extract the relevant part of the above referred to decisions. In 233 [98] ITR 497 at page 506, the Division Bench has stated the legal position as regards the expression "derived from" in the following words :- "A study of various case laws clearly in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of the industrial undertaking, the deposit required for its supply is a step removed from the business of the industrial undertaking. The derivation of profits on the deposit made with the Electricity Board cannot be said to flow directly from the industrial undertaking itself. The learned counsel appearing on behalf of the appellant has referred to several decisions of the Madras High Court in order to contend that the words derived from could be construed to include situations where the income arose from something having a close connection with the industrial undertaking itself. All the decisions cited by the appellant have been considered by the Madras High Court in the case of Pandian Chemicals Ltd. [1998 233 ITR 497. We see....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s it clear that the expression "derived from" should be given a very strict and restricted meaning. The statement of law as declared by the Hon'ble Supreme Court to the effect that Section 80-I of the Act and similar provisions provide for incentives in the form of deductions which are linked to profits and not investment, makes the position clear that such income which is directly earned from and out of the business viz., as in the case on hand, manufacture of chimneys and furnace alone, would fall within the expression "derived from", as set out in the said provision. Since the Hon'ble Supreme Court has made it clear that there is a clear distinction between the terms "derived from and attributable to", the expression "derived from" has g....