1 orders · Page 1 of 1
The High Court held that the interest income earned by the assessee from fixed deposits maintained as security for bank guarantees is not income 'derived from' the manufacturing business for the purpose of deduction under Section 80-IC of the Income Tax Act, 1961. The Court found no basis to distinguish Section 80-IC from Section 80HH, stating that both sections use the word 'derived' and contemplate deduction of income directly flowing from the eligible business activity. The Court reasoned that while the interest might be considered 'business income' under Section 28 of the Act, it does not meet the stricter requirement of being 'derived from' the specific business activity for the purpose of Section 80-IC. The definition of 'business' in Section 2(13) is subject to context, and Section 80-IC specifically requires profits and gains derived from the businesses enumerated in sub-section (2). The Court rejected the assessee's argument that the interest was incidental to the business, emphasizing the distinction between income 'attributable to' and 'derived from' the business. The question of law was answered against the assessee. Both appeals were rejected.
