R. Jayasimha Babu, J.
1. The question referred to us at the instance of the Revenue for the assessment years 1983-84 and 1984-85 is as to 'whether the Appellate Tribunal is right in law in holding that cash assistance and duty drawback received from the Government by the assessee are includible in the profits derived from the industrial undertaking and eligible for relief under Sections 80HH and 80J of the Income-tax Act, 1961 ?'
2. The assessee is engaged in the business of tannery and export of leathers, hides and skins. In the assessment years 1983-84 and 1984-85, the assessee had claimed exemption under Section 80HH of the Act for a sum of Rs. 2,08,100. The profit and loss account of the assessee for the year 1983-84 showed gross receipts which included the cash assistance and drawback of duty aggregating Rs. 26,98,066 as also import licence nomination of Rs. 37,146. The Income-tax Officer excluded the amount of the cash assistance and duty drawback as also the value of the import licence nomination for the purpose of determining the amount in respect of which the exemption under Section 80HH could be allowed. For the assessment year 1984-85, the cash assistance and drawback aggregated to Rs. 36,72,757 and the value of the import licence nomination premium was Rs. 97,897. The assessee claimed exemption under Section 80HH to the tune of Rs. 2,14,002. That claim was negatived by the Income-tax Officer.
3. The assessee had also claimed exemption under section 80J for Rs. 43,178 and Rs. 1,18,645 respectively, for the assessment years 1983-84 and 1984-85. The Income-tax Officer limited the exemption to 2/3rds of the claim.
4. In appeal, at the instance of the assessee, the assessee's claim for the entire amount claimed by it under Section 80HH as also under Section 80J of the Act was allowed. That order of the Commissioner had been upheld by the Tribunal.
5. Learned counsel for the Revenue submitted that Section 80J and also Section 80HH can be invoked only in respect of the profits and gains 'derived from', inter alia, an industrial undertaking, and, therefore, the mere receipt of the amounts by the assessee, though such receipts form part of the profits and gains of the business were not sufficient, and the assessee is required to show further that the profits and gains were 'derived' from the industrial undertaking. It was submitted by counsel that the amounts received by the assessee as cash assistance, duty drawback and import licence nomination entitlements, were receipts which were not 'derived' from the industrial undertaking and though they form part of the profits and gains of the business, those amounts were derived from the activity of export and the immediate source was thus the export and not the industrial undertaking. Counsel referred to and relied on the judgment of this court in the case of Fenner (India) Ltd. v. CIT : [1999]239ITR480(Mad) in Tax Case No. 1873 of 1986 decided by one of us on June 8, 1998, wherein it was held that cash assistance for export is not derived from the industrial undertaking and, therefore, it is not eligible for any relief under Section 80HH of the Act. Counsel also relied on the decision of this court in the case of CIT v. Eastern Seafoods Exports (P.) Ltd. : [1995]215ITR64(Mad) , and another decision of this court in the case of CIT v. Pandian Chemicals Ltd. : [1998]233ITR497(Mad) . Besides these decisions, reliance was placed on the decision of the Supreme Court in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT : [1978]113ITR84(SC) and the decision of the Privy Council in the case of CIT v. Raja Bahadur Kamakhaya Narayan Singh [1948] 16 ITR 325.
6. Learned senior counsel appearing for the assessee, Mr. Ramachandran, submitted that the decision of this court in T. C. No. 1873 of 1986--Fenner (India) Ltd. v. CIT : [1999]239ITR480(Mad) --requires reconsideration, as according to him, the cash assistance, duty drawback as also the value of the import entitlement form part of the business income of the assessee which is brought to tax, and those receipts which form part of the business income are necessarily to be regarded as income derived from the business. Counsel pointed out that such income is not brought to tax under the head 'Income from other sources', but is treated as 'business income', and it could not be so treated unless there was a nexus between the income so received and the business that was carried on by the assessee. All such income should, therefore, be, according to counsel, regarded as income from the business carried on by the assessee. Counsel in this context referred to the amendment to Section 28 of the Income-tax Act by the Finance Act, 1990, with retrospective effect from April 1, 1962, and April 1, 1967 and April 1, 1972. Clause (iiia) and Clauses (iiib) and (iiic) were introduced in Section 28 of the Income-tax Act with retrospective effect from April 1, 1962, April 1, 1967, and April 1, 1972, respectively. As a consequence of the amendment so effected, profits and sale of the import licence, as also the amount of cash assistance (by whatever name called) received or receivable by any person against exports under any scheme of the Government of India is treated as forming part of the profits and gains of the business or profession. It was the submission of counsel that in view of the treatment accorded to such receipts by the Act in treating those receipts as forming part of the profits and gains in business, there can be no doubt whatever that those receipts qualified for the benefits available to an assessee under Section 80HH, as also Section 80J of the Income-tax Act.
7. It was further submitted that there is inextricable link between the business carried on by the assessee, and the receipts of these amounts. If the assessee had not embarked on the business, there had been no occasion for receiving the cash assistance. It is, on account of the business carried on by the assessee, which business included the activity of export, that these benefits became available to the assessee, and the amount so made available to the assessee by the Government of India was not by way of a bounty, but as a part of a scheme intended to encourage the setting up of industries generally, and more particularly in industrially backward areas and further in encouraging the export of the goods made by Indian industries, for sale in foreign markets.
8. The refund of a part of the import duty on raw materials imported by the assessee would only reduce the cost of the product, thereby improving the profitability of the assessee's business. The cash assistance given was meant to offset the loss which the assessee would have suffered by having to sell its product in the foreign market at a price which was below the cost of production, and at prices well below the price prevailing in the domestic market. The import entitlement was only meant to enable the assessee to import the goods required for the manufacture of the goods imported by it, and in so far as the import licences covered other goods, these licences were meant to enable the assessee to augment its income by transferring that import entitlement for a consideration. All these receipts, according to counsel, are receipts which the assessee received by virtue of the business carried on by it, and such benefits would not have been receivable, had the assessee not been engaged in the business of manufacture of the goods and exporting the same.
9. The export of the goods manufactured by the assessee, it was submitted by counsel, cannot be divorced or viewed in a compartment as being capable of deriving an income de hors the business of manufacture carried on by the assessee. The goods manufactured by the assessee were meant to be sold, and it is only by the sale of its product the assessee could derive profits and gains to enable it to continue in business. Sale of the goods manufactured could be either in the domestic market or in the foreign markets. Export was only a part of the marketing efforts of the assessee. All receipts by the assessee which are connected with or as a consequence of the export, therefore in the submission of counsel, constitute part of the total income of the assessee, as also the profits and gains derived by it from the business of manufacture and export.
10. It was further submitted by counsel that though Section 80J as also Section 80HH of the Act used the expression 'derived from', it does not necessarily follow that the meaning of that expression should be narrowed down artificially to only that income which was derived by the assessee directly by the sale of the products manufactured by it, namely, the amounts paid to the assessee by the buyer of its products. So long as the receipt was a consequence of the sales effected and such receipts would not have been available to the assessee in the absence of such sale including export, those receipts are required to be regarded as amounts which are derived from the business of the assessee. The fact that the cash assistance, duty drawback and the import entitlements were made available to the assessee by the Government of India, instead of the buyer paying a higher price for the product, would not make any qualitative difference to the nature of the receipts, as those payments were made by the Government only because of the export effected by the assessee for the goods manufactured by it. The object of the Government in making these payments was to enable the assessee to remain in business as a manufacturing unit capable of selling goods manufactured by it, and selling it in the international market, thereby enabling the country to get valuable foreign exchange.
11. The assessee, it was submitted could not possibly continue to export goods at the lower price, nor could it set up the units in the industrially backward area, and incur additional expense, as a consequence, the benefits provided under Sections 80J and 80HH of the Act were unavailable to the assessee. The whole scheme formulated by the Government was to ensure that the industry would remain profitable. The amounts paid by the Government thus being part of the profits and gains of the business, it would be unreasonable to deny the benefit of Sections 80J and 80HH of the Act by artificially restricting the scope of the words 'derived from' used in these two provisions. The amounts received from the Government were clearly, in the submission of counsel, derived from the industrial undertaking, as it was by the export of the goods manufactured in the undertaking that these receipts were produced. It is the activity of export which had brought in the income. The fact that such income was derived from two sources, one from the buyer of the product and the other from the Government, does not make it any the less, a profit and gain derived by the assessee from its business as manufacturers as also the exporters, of the goods manufactured by the assessee.
12. All the decisions rendered by this court on the points argued by counsel for the assessee are against the assessee, and we are not persuaded that those decisions are required to be reconsidered, on the grounds urged by learned counsel.
13. The decisions rendered by this court in T. C. No. 1873 of 1986--Fenner (India) Ltd. v. CIT : [1999]239ITR480(Mad) as also in the case of C1T Fenner (India) Ltd. v. CIT : [1999]239ITR480(Mad) Eastern Seafoods Exports (P.) Ltd. : [1995]215ITR64(Mad) , have considered the question as to whether the amounts received by an exporter under the scheme formulated by the Government is to be regarded as amounts 'derived' from the business of an industrial undertaking and the court has concluded that they are not. It is no doubt true that arguments so elaborately advanced before us do not appear to have been advanced before the court, when those decisions were rendered. Nevertheless, the relevant statutory provisions, as also the relevant decisions of the Supreme Court, and of the Privy Council and the decisions of other courts, as also the earlier decisions of this court were considered and it was after such consideration that it was held that the benefit of Section 80HH could be claimed only when there was a direct nexus between the profit or gain and the industrial undertaking. Such a direct nexus, it was held, was not there as between the amounts paid to the assessee by the Government as part of the scheme to encourage export of the goods, and the industrial undertaking. It was not the industrial undertaking which yielded the income by way of cash compensatory support, duty drawback and import entitle-'ments, but it was the scheme of the Government which made it possible for the assessee to receive those amounts and the existence of such a scheme was not essential part of the industrial undertaking.
14. The court in those decisions also pointed out the difference in the scope of the two expressions 'attributable to' and 'derived from' and the enunciation made by the Supreme Court with regard thereto.
15. In the case of National Organic Chemical Industries Ltd. v. Collector of Central Excise : 1997(89)ELT643(SC) , it was held by the Supreme Court that the word 'derived' is usually followed by the word 'from', and it means : get or trace from a source ; arise from, originate in ; show the origin or formation of. In the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT : [1978]113ITR84(SC) , it was held that the expression 'derived from' is narrower than the expression 'attributable to'.
16. While the cash assistance, duty drawback and import entitlements are undoubtedly attributable to the business carried on by the assessee and the assessee would not have been in a position to receive any of these benefits, had the assessee not been carrying on business, it cannot be said, however, that such income is 'derived' from the business. The decision of the Karnataka High Court relied on by learned counsel for the assessee in the case of Sterling Foods v. CIT : [1991]190ITR275(KAR) did not examine the distinction between the terms 'derived from' and 'attributable to'. It only proceeded on the basis, that such income being' part of the business income, it must follow that the income is derived from the industrial undertaking.
17. Though it is desirable that the provisions of the statute which impose burdens and those conferring benefits use uniform expressions so that receipts and expenditure are treated in an uniform manner and this controversy as to whether such profits and gains of a business included in the total income should nevertheless be excluded while determining the extent of exemption from tax is avoided, the statute in its present form uses different expressions in different provisions and the court has no option but to give effect to the legislative intention as ascertained from the statutory language. Had it been the intention of Parliament, that all business income qualified for the benefit under Sections 80J and 80HH of the Act, the statutory language would have been different. The fact that an expression which had the narrower meaning has been used, warrants the inference that the Legislature intended to limit the extent of profit and gain that should be properly considered as being relevant for the purpose of those provisions.
18. Though there is some substance on what learned senior counsel for the assessee submitted, we cannot in the light of the statutory language found in these two provisions, and the decisions of the Privy Council as also the Supreme Court holding that the words 'derived from' are narrower than 'attributable to' and that there must be a direct nexus as between the income and the industrial undertaking, we must necessarily hold as has been held by this court in the earlier cases, that the amounts received by the assessee from the Government consequent to the exports effected by it are not amounts which form part of the profits and gains 'derived' from the industrial undertaking.
19. It may perhaps be that it would have been more logical to allow the benefits under Sections 80J and 80HH of the Act for the profits and gains which are taxable as business income of the assessee, as the tax levied, is on the business income, and it would be logical to permit the benefits extended to be availed of by the assessee, by adopting the income regarded as business income as the basis, But that is a matter for Parliament. Courts are to give effect to the statute as it is, and not reshape it into, what in the view of the court, it ought to be.
20. Before concluding we must refer to a decision of this court on which counsel for the assessee placed reliance in the case of CIT v. India Pistons Repco. Ltd. : [1987]167ITR917(Mad) . The court, therein proceeded on the basis that the words 'derived from' and 'attributable to' are synonymous. Though the words used in the Sections which were considered by the court in that decision, were 'derived from', a perusal of the judgment, shows that that words were treated by the court as having the same effect as the word 'attributable to'. The judgment cannot be regarded as having laid down the law correctly in the light of the subsequent enunciation of the law made by the Supreme Court. The other case on which counsel for the assessee placed reliance is the case of CIT v. Wheel and Rim Co. of India Ltd. : [1977]107ITR168(Mad) . That case was considered by this court in the case of CIT v. Eastern Seafoods Exports (P.) Ltd. : [1995]215ITR64(Mad) and it was pointed out therein that in the case of CIT v. Wheel and Rim. Co. of India Ltd. : [1977]107ITR168(Mad) , the court did not consider as to how the words 'derived from' should be read in the context of Section 80J of the Act. That judgment in CJTv. Wheel and Rim Co. of India Ltd. : [1977]107ITR168(Mad) is, therefore, not of any assistance to the assessee.
21. Another Bench of this court more recently in the case of CIT v. Pandian Chemicals Ltd. : [1998]233ITR497(Mad) elaborately considered the decisions of this and other High Courts as also the Supreme Court bearing on the interpretation of the words 'derived from' used in Section 80HH of the Act, and held that there must be a direct nexus between the profit or gain and the business, and the fact that the business is the means for securing the receipts was by itself insufficient.
22. We therefore, answer the question referred to us in favour of the Revenue and against the assessee.
23. After we pronounced the judgment, learned senior counsel for the assessee sought certificate for leave to appeal to the Supreme Court. We have merely followed the law laid down by this court which law has been laid down in the light of the decisions of the apex court. We, therefore, decline to grant the certificate sought for.