TaxTMI 
TaxTMI 
TaxTMI 
2004 (10) TMI 259
X X X X Extracts X X X X
X X X X Extracts X X X X
....r section 80-I on the gross total income and not on the income from printing and publishing of magazines as considered by the Assessing Officer, that is to allow 80-I deduction of Rs. 10,30,418 instead of Rs. 5,10,651 allowed by the Assessing Officer." 3. The facts are that the assessee company is engaged in the business of publishing and the main object of the company is as under: "To carry on the business 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 mag....
X X X X Extracts X X X X
X X X X Extracts X X X X
....209 Sales of Share Price Data Rs. 1,63,350 Sales of Capital Online Rs. 19,31,960 Advertisements Rs. 1,19,42,552 Closing Stock Rs. 27,557 The Assessing Officer has apparently disallowed the claim of the assessee on the ground that there is no direct nexus of these income with the industrial undertaking i.e., publishing and therefore the said income is not derived from the industrial undertaking. The ld. CIT(A) has allowed the claim in the detailed order passed by him. 4. The ld. DR contended before us that deduction under section 80-I is admissible with regard to profits and gains derived from an industrial undertaking. It is submitted that the word 'derive' has a restricted meaning and there should be a direct nexus of such income with th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ic 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. CIT(A) and submitted that the assessee has no other activity except publishing activity and the entire income is flowing from that activity only. It is submitted that advertisement income is a direct result of publishing of advertisement in the magazine and therefore such income is eligible for deduction under section 80-I. It is submitted that the Kerala High Court, in the case of Ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch deposit cannot be said to be flowing directly from the industrial undertaking. Therefore, before any deduction is allowed under section 80-I, it must be established that the profits and gains have directly flowed from the functioning of the industrial undertaking. In other words, there has to be a direct nexus between the income and the functioning of the industrial undertaking before such income can be held to be eligible for deduction under section 80-I. In the case of Orient Press Ltd., it was held 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, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... our view, the raddi sale should form part of income derived from the publishing business. The magazines which are not sold become obsolete and the same are sold as raddi and therefore this income is of the same nature as income received by sale of magazines. Therefore, deduction under section 80-I would be eligible on this income, as held by the CIT(A). The ld. counsel, however, was unable to explain the exact nature of subscription center (Rs. 40,000) and miscellaneous income (Rs. 1,045). Therefore, we hold that deduction under section 80-I is not available on these two incomes and to that extent the order of the ld. CIT(A) is modified. 9. The closing stock of Rs. 27,557 forms part of the trading account and deduction under section 80-I ....