2012 (6) TMI 467

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....ssessee's case, the Tribunal has erred in law while not accepting claim under section 80-I although the assessee fulfilled all the requisite conditions of being an industrial undertaking ?"   2. The facts, in brief, are that the assessee is deriving income from commission and also trading in footwear and filed a return on July 30, 1986, declaring an income of Rs. 7,27,330 for the assessment year 1986-87. The assessee claimed deduction under section 80-I of the Act of Rs.1,40,920 in the assessment year 1986-87 and Rs. 97,494 in the assess- ment year 1987-88. On enquiry, the Assessing Officer found that the entire stock was got manufactured from the sister concern for which production charges were paid at Rs. 12,60,474. The assessee-f....

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.... CIT v. Prabhudas Kishordas Tobacco Products P. Ltd. [2006] 282 ITR 568 (Guj), CIT v. Taj Fire Works Industries [2007] 288 ITR 92 (Mad) and CIT v. Liberty Group Marketing Division [2009] 315 ITR 125 (P&H).   6. Learned counsel for the Revenue supported the order passed by the Tri- bunal and submitted that a similar issue arose before this court in Liberty Shoes Ltd. v. CIT [2007] 293 ITR 478 wherein this court held that the asses- see was not entitled to deduction under section 80-IA in respect of profits and gains from the business of sale of PVC, Liberty shoes got manufac- tured according to its own specifications, designs, etc., from outside agencies. Learned counsel further submitted that this court relying upon the judgment of ....

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....(page 497) :   "The word 'derive' is usually followed by the word 'from' and it means : 'get, to trace from a source ; arise from, originate in, show the origin or formation of'. The source of import entitlements could not be said to be the industrial undertaking of the assessee. The source of the import entitlements could only be said to be the Export Promo- tion Scheme of the Central Government whereunder the export enti- tlements became available. There must be, for the application of the words 'derived from', a direct nexus between the profits and gains and the industrial undertaking. In the instant case, the nexus was not direct but only incidental. The industrial undertaking exported processed sea foods. By reason of such expo....