PANDIAN CHEMICALS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) TWO questions have been referred to us for the assessment year 1981-82. The first question1 referred is the assessee's entitlement to deduction under Section 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 under Section 80HH of the Act. That case is the case of CIT v. Pandian Chemicals Ltd. [1998] 233 1TR 497. 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.

(2.) THE second question1 referred is regarding the maintainability of an appeal under Section 246 of the Income-tax Act as far as the claim of interest under Section 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 v. Addl. CIT . That question is, therefore, answered in favour of the assessee.