COMMISSIONER OF INCOME TAX Vs. RANE MADRAS LIMITED

JUDGEMENT

(1.) IN pursuance of the directions of this court in T.C.P. Nos. 285 to 292 of 1982 dated January 9, 1984, the Appellate Tribunal has referred the following common question of law for the assessment years 1966-67, 1967-68, 1968-69, 1969-70, 1970-71 and 1971-72 :

(2.) THE assessee is a company engaged in the manufacture of tie rods and clutches, viz., automobile parts. THEre is no dispute that the assessee is a priority industry. For the assessment years 1966-67 to 1971-72, the assessee, inter alia, claimed relief under Sections 80E and 80-I of the Income-tax Act, 1961 (hereinafter to be referred to as "the Act"), in respect of the following receipts : (i) selling agency commission ; (ii) receipts from job work ; (iii) interest on deposits ; and (iv) receipts by way of exchange fluctuations on forward contract. THE Income-tax Officer for the assessment year 1966-67 to 1970-71 granted the relief under Sections 80E and 80-1 of the Act in the original assessment, but later on passed an order under Section 154 of the Act and disallowed the claim of the assessee. Similarly, for the assessment year 1971-72, the Income-tax Officer did not grant the relief under Sections 80E and 0-I of the Act in the original assessment made by him for the same reasons. THE Commissioner of Income-tax (Appeals), on appeals preferred by the assessee, went into the matter in detail, and came to the conclusion that the assessee was entitled to the relief under sections 80E and 80-I of the Act in respect of the receipts by way of selling agency commission, job work, interest on deposits and exchange fluctuations on forward contract. THE view of the Commissioner (Appeals) was upheld by the Income-tax Appellate Tribunal and the order of the Appellate Tribunal is the subject-matter of present tax case references on the basis of the directions of this court.

(3.) IN so far as interest on deposits made by the assessee for obtaining electricity connection is concerned, the position is well settled by the decision of this court in CIT v. Seshasayee Paper and Board Ltd., 1994 207 ITR 80 wherein this court held that in so far as the interest received by the assessee on the deposit kept with the Electricity Board is concerned, the relief would be admissible under Section 80-I of the Act. Following the decision of this court in Seshasayee Paper and Board Ltd.'s case, [1994] 207 ITR 80, the assessee is entitled to deduction under Sections 80E and 80-I of the Act towards the interest on the deposits with the Electricity Board.