Law:

Section:

Section 80-I of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings, etc., after certain dates - Assessment years 1989-90 to 1991-92 - Assessee-company was engaged in manufacture of chimney and furnace - Assessee claimed that interest income earned from certain deposits made with company 'F' by way of fixed deposits towards security should be treated as income derived from its industrial undertaking - On said basis, assessee claimed benefit of section 80-I in respect of interest income - Assessing Officer rejected assessee's claim holding that interest income was chargeable to tax as 'income from other sources' and same could not be treated as part of 'business income' - Commissioner (Appeals) as well as Tribunal allowed assessee's claim - Whether income which was directly earned from and out of business i.e., manufacture of chimneys and furnace alone, would be eligible for deduction under section 80-I - Held, yes - Whether, therefore, interest income earned by assessee from fixed deposits was not entitled to deduction under section 80-I - Held, yes Words and Phrases : 'derived from an industrial undertakings' as occurring in section 80-I of the Income-tax Act, 1961. FACTS The assessee-company was engaged in the manufacture of chimney and furnace. The assessee claimed that interest income earned from certain deposits made with Company 'F' by way of fixed deposit towards security should be treated as income derived from its industrial undertaking. On that basis, assessee claimed the benefit as provided under section 80-I. The assessing authority took a view that such interest income was income from other source and that the same could not be treated as 'part of business income'. On ap¬peal, Commissioner (Appeals) directed the Assessing Officer to recompute the deduction under section 80-I, treating the interest receipt as part of the business income. The Tribunal upheld the order passed by the Commissioner (Appeals). On revenue's appeal : HELD It is clear from the decision of the Supreme Court in the case of Liberty India v. CIT [2009] 317 ITR 218/ 183 Taxman 349 that the expression 'derived from' should be given a very strict…

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