COMMISSIONER OF INCOME TAX Vs. SURANA STRIPS LIMITED

JUDGEMENT

(1.) THE respondent is an industrial undertaking. In its returns submitted for the assessment year 1993 -94, it claimed deduction under Section 80HH of the Income Tax Act, 1961 (for short the Act), for a sum of Rs.20,40,341/ -. According to it, the said amount represents the interest on belated payment of the purchasers of the product manufactured by it. In his order of assessment, dated 15.03.1996, the Assessing Officer disallowed the deduction by treating it as not qualified under Section 80HH of the Act. The respondent filed an appeal before the Commissioner (Appeals). The appeal was allowed through order, dated 10.07.1996. Aggrieved by that, the Revenue filed I.T.A.No.1671/Hyd/96 before the Hyderabad Bench of the Income Tax Appellate Tribunal. The appeal was dismissed through order, dated 29.05.2001. Hence, this further appeal under Section 260 -A of the Act by the Revenue.

(2.) THE following substantial question of law is canvassed before this Court:

(3.) SRI J.V.Prasad, learned counsel for the appellant submits that the profits and gains, that are derived by the respondent from the activity of manufacture of cold roll strips alone, that qualify for deduction, to the extent of 20% under Section 80HH of the Act and the interest on belated payment does not at all fall into that category. He submits that it is only the cost of the product manufactured and sold by the respondent that becomes the income, and thereby, the profit, referable to Section 80HH of the Act and not interest on belated payment. He also submits that the Assessing Officer has analysed the matter with reference to the relevant facts but the Commissioner and the Tribunal have taken a hyper technical view of the matter. Reliance is placed upon the Judgment of the Supreme Court in Commissioner of Income Tax vs. Pandian Chemicals Ltd., 262 ITR 278.