- (1.) The subject matter of this appeal is a judgment and order dated September 30, 2005, passed by the learned Income tax Appellate Tribunal dismissing an appeal preferred by the assessee and agreeing with the views of the Commissioner of Income-tax (Appeals) and the Assessing Officer that the 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, 2003 262 ITR 278 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 Kamakhaya Narayan Singh, 1948 16 ITR 325 when it said (page 328): 'The word "derived" is not a term of art. Its use in the definition indeed demands an enquiry into the genealogy of the product. But the enquiry should stop as soon as the effective source is discovered. In the genealogical tree of the interest land indeed appears in the second degree, but the immediate and effective source is rent, which has suffered the accident of non-payment. And rent is not land within the meaning of definition.'" On behalf of the assessee, an analogy was sought to be drawn from section 80J which their Lordships distinguished by pointing out that in section 80J the language used was "attributable to". It was held that the expression "attributable to" is of wider import whereas the word "derived" has been interpreted to be of a narrower import.
(2.) Mr. Mazumder, learned advocate appearing for the appellant, submitted that at all the stages the authorities including the Tribunal relied upon the judgment in the case of Pandian Chemicals but they omitted to notice that the word "derived from" has consciously been not used in section 33AB. Therefore, there was no reason, according to him, why the meaning of the section should be ascertained by applying a judgment which is altogether on a different point. He drew our attention to a judgment of this court in the case of CIT v. Tirupati Woollen Mills Ltd., 1992 193 ITR 252 wherein the following view was taken (headnote): "The Tribunal had found that the interest arose from utilization of commercial assets. The funds utilised in making fixed deposits with banks were business funds lying temporarily surplus with the assessee. It was, therefore, assessable as business income and revenue expenditure could be deducted from it."
(3.) He also drew our attention to a judgment in the case of Eveready Industries India Ltd. v. CIT, 2010 323 ITR 312 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 deposits made out of the business funds available with the assessee before they were utilised for actual business and, therefore, it was incidental to the business activity of the assessee and interest on such short-term deposits must be treated as business income.";