TaxTMI 
TaxTMI 
2004 (10) TMI 259
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.... of printers and publishers of any newspapers, journals, magazines and other literary works, undertakings and publications including printing of reports, accounts statements and stationery calendars, pictures and other works of art." During the course of the aforesaid business activity, the assessee is publishing weekly/fortnightly magazines called 'Capital Growth', 'News Letter', 'Share Price Data' and 'Capital Online'. The assessee has earned income from the sale of these magazines as also from advertisements published in these magazines. The assessee claimed deduction under section 80-I of the IT Act. The Assessing Officer was of the view that deduction under section 80-I is not admissible in respect of some of the types of income earned by the assessee. The assessee claimed deduction under section 80-I at Rs. 10,30,418, which was restricted by the Assessing Officer to Rs. 5,10,651 only. The assessee's total turnover during this year is represented by the following: Sales & subscription Rs. 1,50,90,437 ....
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....bsp; Rs. 43,005 --------------- Rs. 1,30,80,659 Less: Subscription refund Rs. 10,41,681 --------------- Rs. 1,20,38,978 &n....
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....red for its supply, is a step removed from the business of the industrial undertaking. Held accordingly, that interest derived by the industrial undertaking of the assessee on deposits made with the Electricity Board for the supply of electricity for running the industrial undertaking could not be said to flow directly from the industrial undertaking itself and was not profits or gains derived by the undertaking for the purpose of the special deduction under section 80HH." The ld. DR has also invited our attention to the ITAT 'F' Bench, Mumbai Order dated 24-2-2004 in the case of M/s. Orient Press Ltd. in ITA No. 5915/Mum./96, to which one of us (Accountant Member) was a party. The ld. DR submitted that in the above case, the Supreme Court decisions in the case of Pandian Chemicals Ltd. as also in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (SC) have been considered and analysed. The ld. DR submitted that indirect income like advertisement income cannot be said to be flowing from the industrial undertaking and therefore deduction under section 80-I is not admissible. 5. The ld. counsel for the assessee strongly supported the order of the ld....
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.... that the income derived from courier service by a publishing house has no nexus whatsoever with the industrial undertaking and therefore is not eligible for deduction under section 80-I. It may be mentioned here that the Kerala High Court, in the case of Malayala Manorama Co. Ltd., held that income derived publishing of advertisements in the newspapers/magazines would be eligible for deduction under section 80-I. 7. In the present case, the main income on which deduction has been disallowed by the Assessing Officer is income from advertisement. In our view, the income derived by the assessee from publishing of advertisements in the magazines has a direct and intimate connection with the functioning of the industrial undertaking. If the relevant magazines are not published, the assessee will have no income from advertisement. As a matter of fact, the newspapers and magazines survive only on account of income received from advertisement published in the newspapers and magazines. For example, the cost of production of a newspaper may amount to Rs. 6-7, whereas it is sold for an amount of Rs. 2 only. The main receipts would be from publishing of advertisements. In our view, the inc....