TaxTMI 
TaxTMI 
2011 (8) TMI 334
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....plication of the judgment of the Supreme Court in the case of KARNATAKA CO-OPERATIVE BANK [251 ITR 13] to the appellant's case is a defect rectifiable under Section 154? (ii) Whether in the facts and circumstances of the case, the Tribunal was right in holding that the interest earned by the assessee on Kisan Vikas Patra and NSC etc. is income from business eligible for deduction under Section 80P(2)(a)(ii) and not income from other sources? 2. The assessee herein is a co-operative society engaged in the production and sale of Kancheepuram Silk Sarees woven by members. The assessee herein invested its funds in various Government securities viz., Kisan Vikas Patra, Indra Vikas Patra etc. as directed by the Deputy Director of ....
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....passed in the case of the Kancheepuram Silk Weavers Co-operative Production and Sale Society Limited and pointed out that the assessee, who went in for credit facilities with the Government, had no choice except to make this investments in the Government securities. The investments thus prompted by the business exigencies is clearly substantiated the letter of the Deputy Director of Handlooms and Textiles. Thus, the Commissioner of Income Tax (Appeals) viewed that even though the income is attributable to the business and derived from the business, by reason of scope of Section 154 of the Income Tax Act, the assessee was not entitled to the relief. Aggrieved by the same, the assessee went on appeal before the Income Tax Appellate Tribunal. ....
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.... 154 of the Act. Thus recording the said statement of the learned Standing Counsel, the first question is answered against the Revenue. 6. As far as the second substantial question of law is concerned, as already pointed out, the investment made by the assessee in Government securities was evidently on account of compulsion of the law. In terms of the scheme on credit facility offered by the State Government, the assessee acted on the directions of the Deputy Director of Handlooms and Textiles and made investments in the Government securities. This was done by drawing money from the bank. Thus, rightly the Tribunal held that the investment made by the assessee was linked to the business exigency stands clearly established for gettin....
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....nted out that the connotations of the words 'derived from' is narrower as compared to that of the phrase 'attributable to'. The Apex Court pointed out that when the Parliament uses the expression 'derived from', it intended to cover sources which have a direct nexus to the business activities. 10. In the decision reported in 262 ITR 278 PANDIAN CHEMICALS LIMITED v. CIT., which was referred to in the decision reported in 317 ITR 218 LIBERTY INDIA v. CIT, the Supreme Court held that the words 'derived from' in Section 80HH of the Income Tax Act, 1961, must be understood as something which has a direct or immediate nexus with the assessee's industrial undertaking. In so holding, the Apex Court also referred to the decision reported in ....