1995 (5) TMI 15

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....nting the interest from London brokers, other interest and miscellaneous receipts should be treated as income derived from shipping business eligible for relief under section 80J of the Income-tax Act, 1961 ? " The relevant facts of the case are as follows : The reference application relates to the assessment year 1972-73. The assessee, South India Shipping Corporation Limited, is a public limited company carrying on shipping business and it is a resident shipping company. In computing the relief under section 80J for the assessment year 1972-73, the Income-tax Officer did not treat as profits derived from the shipping business an income of Rs. 3,32,848 included under the head, " Business income " (comprising interest from brokers in Londo....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... P. P. S. Janarthana Raja, contended that there is no error of law in the order passed by the Income-tax Appellate Tribunal. In this connection, it is useful to refer to section 80J of the Act which reads as follows : " 80J. Deduction in respect of profits and gains from newly established industrial undertakings or ships or hotel business in certain cases.--(1) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains (reduced by the deductio....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ourt, with reference to the following question whether, on the facts and in the circumstances of the case, the sum of Rs. 2,77,692 awarded to the assessee as interest was rightly held to be a revenue receipt, has observed as follows (at page 884) : " The sum of Rs. 2,77,692 was received by the assessee as interest on the amounts which were determined to be payable by the assessee in respect of certain contracts executed by the assessee and in regard to the payments under which there was a dispute between the two parties. The assessee is a contractor. His business is to enter into contracts. In the course of the execution of these contracts, he has also to face disputes with the State Government and he has also to reckon with delays in the....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....nt licences was an act wholly unconnected with the business in the goods which were either required to be exported or imported for the purpose of the assessee-company. In the absence of any immediate and direct nexus between the sale of the licences and the assessee's business activity, the assessee is not entitled to the benefit under section 80J of the Act. In a recent Division Bench ruling of this court, in CIT v. Tamil Nadu Dairy Development Corporation Ltd. [1995] 216 ITR 535 (Tax Cases Nos. 66 and 67 of 1982, dated March 23, 1995) to which both of us were members, with reference to short-term deposits made by the Tamil Nadu Dairy Development Corporation out of the business funds available with the assessee-company before the same wer....