Commissioner of Income Tax Del vs Jindal Photo Films Ltd.

The question of law framed by the Court in this appeal which is directed against the impugned order dated 13th March 2001 passed by the Income Tax Appellate Tribunal (''ITAT'') for the Assessment Year (''AY'') 1993-94 reads as follows:

"Whether the ITAT is right in holding that interest of Rs. 24,60,952 earned by the Assessee on FDRs in banks is income derived from industrial undertaking and should be included in the computation for deduction under Sections 80HH and 80I of the Income Tax Act, 1961?

None appears for the Appellant.

Learned counsel for the Respondent draws the attention of the Court to the decision in Commissioner of Income Tax Vs. Shri Ram Honda Power Equip etc. etc., which has been affirmed by the Supreme Court in ACG Associated Capsules Pvt. Ltd. (Formerly Associated Capsules Pvt. Ltd.) Vs. The Commissioner of Income Tax, Central-IV, Mumbai, as well as to the decision passed by this Court in Commissioner of Income Tax Vs. Kelvinator of India Ltd. .

While the decision in ACG Associated Capsules Pvt. Ltd. (supra) was in the context of export earnings Section 80HHC of the Act, the decision in Kelvinator of India Limited (supra) was in the context of earnings of an industrial undertaking under Section 80I of the Act. In light of the aforementioned decisions, the question has to be answered in the negative. It is accordingly held that interest on fixed deposit receipts in Banks cannot be said to be derived from an industrial undertaking and will not be included in the computation for deduction under Sections 80HH and 80I of the Act. The question is, therefore, answered in favour of the Revenue and against the Assessee. However, the Respondent Assessee would be entitled to claim a limited benefit of the expenditure of net interest by application of the principles/conclusions Nos. 8 and 9 of the in terms of the decision in Shri Ram Honda Power Equipment (supra).

The appeal is disposed of.