Pandian Chemicals Ltd. vs Commissioner of Income Tax

R. Jayasimha Babu, J.—Two questions have been referred to us for the assessment year 1981-82. The first question1 referred is the

assessee''s entitlement to deduction u/s 80HH of the Income Tax Act 1961, in respect of the sale of scraps, gunny bags, interest receipt, etc. The

Tribunal has held that the assessee is not entitled to that deduction. So far as interest receipt is concerned, in a case concerning the assessee for an

earlier year, it was held that no deduction can be claimed in respect of that item for the purpose of calculating deduction u/s 80HH of the Act. That

case is the case of Commissioner of Income Tax Vs. Pandian Chemicals Ltd., . So far as the other items mentioned such as scraps and gunny

bags, no details have been given. There is nothing to show that these items were necessary by-products in the process of manufacture and that the

amount realised from the sale were capable of being regarded as income from the industrial undertaking. The Tribunal was, therefore, right in

rejecting those claims as well. The first question is answered against the assessee.

The second question1 referred is regarding the maintainability of an appeal u/s 246 of the Income Tax Act as far as the claim of interest u/s 214

of the Income Tax Act was concerned. As admittedly there were other questions raised by the assessee along with the question regarding interest,

such levy was clearly capable of being questioned in an appeal, as has been held in the case of Rajyam Pictures Vs. Addl. Commissioner of

Income Tax, . That question is, therefore, answered in favour of the assessee.