COMMISSIONER OF INCOME TAX Vs. A M MOOSA

JUDGEMENT

(1.) AS directed by this court under Section 256(2) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal referred the following questions for the opinion of this court :

(2.) FIRST, we take up the first question for consideration. This question came up for consideration before this court in the case of the assessee itself for the assessment year 1979-80 and then a Division Bench of this court in the case of the assessee himself (see A. M. Moosa, Bharath Sea Foods v. CIT, 1997 224 ITR7 35 ), held that in order to claim special deduction under Sections 80HH and 80J of the Income-tax Act, 1961, the profits should be relatable to an industrial undertaking and there has to be material to show that it is derived from the business activity relatable to such an industrial undertaking. Profit or gain can be said to have been derived from an activity carried on by a person only if the said activity is an immediate and effective source of the said profit or gain. The Division Bench also held that, (page 739) "there is no trace of any factual material to ascertain whether the amount can be said to have derived from business activity with reference to the industrial undertaking as is clearly contemplated in the statutory provisions". This is how the High Court eventually held that in working out the relief due to the assessee under Sections 80HH and 80J, the Tribunal was right in excluding the export house premia and the sale of import entitlements.