2007 (5) TMI 226

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.... at an amount of Rs. 8,63,500 for the assessment year 1997-98. The assessing authority disallowed the deduction under sections 80HH and 80-I of the Income-tax Act, 1961, in respect of the amount of Rs. 2,76,009, which was claimed by the assessee as an income on account of the interest and carrying charges, and treated it to be an income on account of the interest on trade debtors and creditors against the regular business transactions of the sale and purchase having been carried on and conducted by the assessee. 3. The assessing authority primarily disallowed the deductions on the ground that the interest and carrying charges is an income which has not been derived from the industrial undertaking and that such an activity cannot be treated....

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.... Extraction Ltd. [1998] 230 ITR 266 (MP). While interpreting the words "derived from" the apex court in Pandian Chemicals Ltd. v. CIT [2003] 262 ITR 278 observed as under (headnote) : "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. Although electricity may be required for the purposes of the industrial undertaking, the deposit required for its supply is a step removed from the business of the industrial undertaking." 7. In CIT v. Paras Oil Extraction Ltd. [1998] 230 ITR 266 (MP) it has been observed as under (headnote) : "The words 'derived from an industrial undertaking' mean that the income has been d....