2015 (8) TMI 465

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....e interest earned by the assessee cannot be taken into account for the purpose of giving benefit under section 33AB. At all the stages inspiration was drawn from the judgment of the apex court in the case of Pandian Chemicals Ltd. v. CIT reported in [2003] 262 ITR 278 (SC) wherein their Lordships held that in extending the benefit under section 80HH income arising out of interest should not be taken into account. The aforesaid view was taken because the benefit under section 80HH was relatable to profits and gains derived from an industrial undertaking. Their Lordships were of the opinion that (page 280 of 262 ITR) : "The word 'derived' has been construed as far back in 1948 by the Privy Council in CIT v. Raja Bahadur Kamak....

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.... was taken (headnote) : "The Tribunal had found that the interest arose from utilisation of commercial assets. The funds utilised in making fixed deposits with banks were business funds lying temporarily surplus with the asses see. It was, therefore, assessable as business income and revenue expenditure could be deducted from it." He also drew our attention to a judgment in the case of Eveready Industries India Ltd. v. CIT reported in [2010] 323 ITR 312 (Cal) wherein the following view was taken (headnote) : "that the main activity of the assessee was growing, manufacturing and selling of tea and not that of earning interest by investing in short-term fixed deposits. The assessee earned interest on such short- term depo....

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....application to the facts and circumstances of the case. When the matter was taken up on an earlier occasion we had requested Mr. Mazumder to produce before us a copy of the balance-sheet for the relevant year which he has produced today before us. From the balance-sheet, it appears that the assessee has, during the relevant year, paid or credited interest amounting to Rs. 2,62,21,000. The assessee has earned interest amounting to a sum of Rs. 1,85,63,000. It is not in dispute that the surplus commercial funds available with the company were kept in short- term fixed deposits. The company has borrowed funds for the purpose of carrying on its business. The funds may not always be necessary or may not always be blocked. Therefore, the funds wh....